The calm before the storm?

Markets for a variety of recyclables have lacked positive momentum for much of this year, whether we’re talking aluminum, copper, ferrous or polyethylene terephthalate (PET). However, as companies embrace decarbonization efforts, recyclables surely will benefit; many processors and traders believe it’s only a matter of time.

Forecasts appear to back up that sentiment.

In the metals segment, Wood Mackenzie, a global business information and research services firm, projects that demand for steel scrap will increase by 200 million tons per year by 2040, while aluminum scrap demand will increase by 75 million tons per year by 2040.

GMK Center, a Ukraine-based consultancy, says global demand for steel scrap in 2030 will reach 778 million tons, which is 15.1 percent more than in 2021. That figure increases to 964 million tons in 2050, the year by which several global steel producers have targeted to achieve their carbon neutrality goals.

In a recent report, Wood Mackenzie, says the steel industry is “set to undergo a significant transformation as decarbonization efforts accelerate.”

The report predicts electric arc furnace (EAF) technology, increased use of “green” feedstock and evolving carbon policies will play leading roles in the transformation, while relatively high-carbon-emissions steel made in China and India could experience difficulties in the global steel market, including potential carbon taxes.

Wood Mackenzie projects global EAF steel production will grow from 28 percent to 50 percent by 2050, with “greener” feedstocks, such as direct-reduced iron (DRI) and high-grade ferrous scrap likely benefiting from the transition. The company predicts the share of these feedstocks in total metals demand will increase from 36 percent to 54 percent by 2050, “leading to new production, processing and trading hubs for low-carbon iron and scrap.”

As high-quality scrap likely will play a larger role in fulfilling demand going forward, recyclers who are investing in their operations now while markets are less than stellar likely will be best positioned to benefit from the increased demand that decarbonization promises.