Ferrous metals

Extract BIR Annual Report 2018

Ever-higher levels of steel production around the world created growing demand for our material in 2018, prices of which remained relatively strong throughout the year. However, the year also provided multiple causes for concern in the form of: trade wars; import restrictions and bans; financial woes in key markets such as Turkey; and the fathomless implications of Brexit.

Let’s start with the pluses. Last year ended on a largely positive note for our industry in most parts of the world. In Europe, for example, mills’ order books were generally strong and scrap prices remained healthy. As the year-end approached, world crude steel production was running 4.7% ahead of that for 2017, with the big hitters of China, the USA and India all recording sharp upturns in output of, respectively, 6.7%, 5.7% and 4.9%. In effect, 2018 was on course to register another all-time high in global steel output.

At the same time, many of the world’s growth areas for steel production – including the Indian Sub-Continent – were increasingly establishing themselves as go-to destinations for scrap exporters.

Meanwhile, data for the first half of 2018 indicated a 41% surge in steel scrap usage for crude steel production in China. This development was as a direct consequence of the government’s bid to establish stricter pollutant emission controls, underlining once again the ecological soundness
of choosing scrap over alternative sources of raw material. In effect, use of scrap is becoming ever more imprinted on the Chinese steel industry’s DNA: the country’s basic oxygen furnace mills have upped their scrap ratios to, typically, 20-25% while, at the same time, many new electric arc furnaces have been installed or are in the pipeline, leading to further investments in steel scrap processing machinery such as shredders.

All this is good news for our industry, but there has been disappointment too in the form of recent confirmation by China that various forms of iron and steel scrap would be switched from non-restricted to restricted status for the purposes of imports with effect from July this year. BIR has waved the flag for free and fair trade throughout its 70-year history, but 2018 was to be a year in which that principle would be challenged on many fronts. The current phase of protectionist activity – involving the USA, China and Turkey, among others – impacted the scrap markets by altering flows of material, thus underlining once again the ability of our scrap industry to adapt to ever- changing circumstances beyond its control.

It has become something of a truism to state that our industry’s course through any new year is difficult to predict because of too many unknowns. For 2019, these include: the softness or hardness of Brexit and the nature of the relationship that will exist between the UK and EU member states from late-March onwards; the US/China trading relationship, which has recently shown signs of improvement but which still has the potential to undermine our markets; and the US Federal “shutdown” and other political unknowns that all conspire to create an unsettling environment for businesses.

Discussion of tariffs and other such tools dominated the debate at our two meetings in 2018.

In London last October, Fastmarkets metals analyst Lee Allen argued that the positive steel pricing environment in the USA would persist so long as tariff structures remained in place and that protectionist measures could encourage mills to invest in more modern technology.

Earlier in Barcelona, Jason Schenker of Prestige Economics also reminded us of the need, despite an uncertain economic climate, for the recycling industry to take full account of technological changes. He predicted a significant increase in automation within scrap operations, potentially including driverless trucks and scrap-carrying drones. While this may sound fanciful to some, he provided us with a timely reminder that, throughout the course of recent decades, the lion’s share of the recycling industry spoils has invariably been captured by the most agile businesses that were prepared to push innovation to the limit.

by Tom Bird, 
Interim President Ferrous Division 2018

PRESIDENT FERROUS DIVISION
Gregory Schnitzer
Schnitzer Steel Industries (USA)

IMPORTANT FACTS

Ferrous metals are mainly composed of iron and have magnetic properties. Steel, an iron alloy containing carbon, is by far the most recycled material in the world. Total crude steel production in 2018 reached 1.8 billion tonnes, with verified data for 81% of global steelmaking indicating an associated steel scrap use of just under 470 million tonnes. A further 70 million tonnes of scrap is consumed by the world’s iron and steel foundries each year. Global external steel scrap trading - including internal EU-28 trade - amounted to 105.4 million tonnes in 2018 for an increase of 2.6% over 2017, according to BIR statistics.
The most commonly recycled items are scrap from industrial processes, and also end-of-life products such as containers, vehicles, appliances, industrial machinery and construction materials.

Proportion of steel scrap used in domestic steel production (2018):

China
20.2%
EU-28
55.9%
USA
69.4%
Japan
35%
Russia
42.5%
Turkey
80.7%
Republic of Korea
41.4%

These figures show that, throughout the world, use of scrap metal has become an integral part of the modern steelmaking sector, improving the industry’s economic viability and reducing its environmental impact. Compared to ore extraction, the use of secondary ferrous metals significantly reduces CO2 emissions, energy/water consumption and air pollution. At the same time, the recycling of steel makes more efficient use of the Earth’s natural resources.

RECYCLING PROCESSES

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In general, metal recycling is a pyramid industry with many small companies at the bottom feeding scrap to large multi-nationals at the top. Steel recycling involves some, or all, of the following steps:

Sorting:  Magnets attract steel and so, through the use of magnetic belts, this metal can be easily separated from other recyclables such as paper in a recycling facility. Different kinds of steel do not need to be separated.

Shredding:  Shredders incorporate rotating magnetic drums to extract iron and steel from the mixture of metals and other materials.

Media separation: Further separation is achieved using electrical currents, high-pressure air flows and liquid flotation systems. 

Shearing: Hydraulic machinery capable of exerting enormous pressure is used to cut thick, heavy steel recovered from, for example, railways and ships. Other cutting techniques, such as the use of gas and plasma arc torches, are sometimes employed.

Baling: Iron and steel products are compacted into large blocks to facilitate handling and transportation.

APPLICATIONS

Steel is ideal for recycling because it does not lose any of its inherent physical properties during the process, which can be repeated ad infinitum. Steel is 100% recyclable and, therefore, recycled steel can be used for the same applications as steel produced from virgin material. Products that are made of recycled steel include:

  • Construction materials for roads, railways, infrastructure & buildings

  • Electrical appliances

  • Cans & containers

  • Automobiles & other vehicles

  • Office supplies

  • Hardware such as bolts, nuts and screws

RECYCLING FACTS

  • Recycling one tonne of steel saves 1100 kg of iron ore, 630 kg of coal and 55 kg of limestone.
  • Recycling one tonne of steel saves 642 kWh of energy, 1.8 barrels (287 litres) of oil and 2.3 cubic metres of landfill space.
  • Every tonne of steel made from recycled scrap saves enough energy to power four homes for a whole year.
  • Steel recycling uses 74% less energy, 90% less virgin material and 40% less water; it also produces 76% fewer water pollutants, 86% fewer air pollutants and 97% less mining waste.
  • A BIR-commissioned study conducted by Imperial College London has concluded that CO2 emissions are reduced by 58% when using ferrous scrap in steelmaking rather than virgin ore.

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