Scrap groups unhappy with EU vote to tighten controls on ‘waste’ metal exports to non-OECD nations

Associations representing both metal recyclers and steelmakers in Europe were not satisfied by the result of a vote by the Environment Committee (ENVI) of the European Parliament this week on the proposed revision to the Waste Shipment Regulations (WSR)

The ENVI voted overwhelmingly to toughen the rules on the export of material classified as waste under EU law, in a sitting on Thursday December 1.

EU metal recycling associations were disappointed that ENVI, in voting for the revised WSR, refused to differentiate furnace-ready scrap metal from waste which requires dismantling and treatment.

EU steel association Eurofer, which would like to keep more ferrous scrap inside the region, welcomed the stricter export rules proposed by the revised WSR for non-OECD countries, but demanded stronger monitoring for scrap exports to OECD member states.

In order to be passed into law, the regulation must pass through a plenary session in the European Parliament in January, and a vote in the Council of the EU.

When the European Commission first discussed toughening the WSR in November 2021, it said that any measures would come into force three years after it entered into law.

Market sources expect that once the regulations come into force, they will stop EU exports of lower-grade materials such as HMS 1&2 steel scrap to non-OECD countries such as India, Bangladesh and Pakistan.

This could cause a shortage of lower-grade scrap in these countries but also reduce both prices and collection volumes in the EU market, due to the consequent oversupply of such material, recycler sources have said.

For non-ferrous metals, the export of materials such as motor scrap and industrial cable waste (ICW), such as insulated copper wires, to countries such as Malaysia is expected to be halted.

EU steel scrap exports totalled 19.5 million tonnes in 2021, about 59% of total EU waste exports, according to official data cited by Eurofer.

Are flows to OECD nations safe?

One of the key questions raised by the associations was the rules for the export of waste materials to OECD nations, such as key steel scrap buyer Turkey.

Although the ENVI did not also vote to toughen rules on the export of waste materials to OECD nations, this prospect remains much more likely than before under the new WSR, according to a joint statement by two German associations - the Verband Deutscher Metallhändler (VDM) and the Federal Association for Secondary Raw Materials and Waste Disposal (BVSE).

The revised WSR text says that the EU Commission will “also monitor waste exports to OECD countries more closely to ensure that they manage waste in an environmentally sound manner.” The associations said that they “fear that here the European steel industry is given an instrument with which it can prevent metal scrap exports at any time.”

“We have to fight on,” VDM and BVSE representatives told Fastmarkets. “The tension between recyclers and producers on this issue has not yet been resolved. Unfortunately, it can be assumed that the steel and metal industry will continue to fight against metal exports.”

EU steel scrap exporters have ramped-up sales of HMS 1&2 into Turkey over recent days, taking advantage of a need for cargo in the country.

Fastmarkets’ daily index for steel scrap, HMS 1&2 (80:20 mix), North Europe origin, cfr Turkey, was calculated at $370.46 per tonne on December 2, up by $9.02 per tonne over the past two days, and by $22.07 per tonne week on week.

“The Committee thinks there should be no difference between treated furnace-ready ‘waste’ and difficult and problematic material. All exports fall under the ‘waste’ label,” an EU recycler association source told Fastmarkets.

In order for non-OECD countries to be able to gain access to an approved list to import such materials, certain criteria must be met. The EU would expect non-OECD countries to adhere to EU standards in the processing of the imported raw materials, the source added.

Fastmarkets has heard from industry sources previously that such criteria could include rules on minimum wages and the use of child labor, but no such details have been confirmed.

Exports of very high-grade scrap to non-OECD countries will still be possible in theory under the rules, should the exporting company be able to gain official accreditation to sell material under the end-of-waste regime, according to Denis Reuter, chief operating officer at Germany’s TSR Recycling and ferrous board president, speaking at the Bureau of International Recycling (BIR) Dubai ferrous session in October.

As EU law stands, recyclers would still be able to export very high-grade scrap, such as clean copper candy/berry and steel busheling, under the EU’s end-of-waste regime, subject to a rigorous audit.

But Eurofer is also calling for stronger surveillance of use of the end-of-waste classification.

Eurofer said on Thursday that “a stronger monitoring procedure” was absolutely necessary to make the new regulation ‘waterproof’. It added that this would require country-level assessment for OECD countries, prioritizing the most important waste export flows, such as ferrous scrap; tougher anti-circumvention measures targeting an undue use of the end-of-waste classification for exported materials; and a facility-based audit system covering all their activities.

Elina Virchenko in Dubai contributed to this article.

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