BDSV: Ferrous scrap use rising in Germany

At its 2021 annual conference, the Federal Association of German Steel Recycling and Disposal Cos. (BDSV) issued a report saying in part that steelmakers in German are using “more scrap due to the rising costs for CO₂ certificates and to compensate for the likewise sharp rise in iron ore prices.”

Although originally planned as a face-to-face event, BDSV held its annual conference online “at short notice, due to the current situation,” the group says in reference to rising COVID-19 case numbers in Europe.

In its economic report, BDSV says supply chain-related problems in the automotive sector and other industries “have so far not been reflected in the order books of the steel industry,” with “crude steel production in Germany still pointing upwards.

“In the course of the year to date, [steel] production has increased by 15 percent to 33.6 million metric tons and has led to a correspondingly higher demand for scrap,” writes BDSV. The group also says German steel producers used more scrap because of lofty iron ore prices and the goal of lower carbon emissions.

“The high demand for scrap met a very tight supply, especially in the area of [prompt] scrap,” writes the association. “Persistent delivery bottlenecks for intermediate products and steel led in some cases to production stops in industry and thus to a reduced volume of [prompt] scrap.” As a result, says BDSV, the gap between the price of prompt and obsolete scrap in Germany widened, as it has in the United States.

BDSV also expressed concern about the EU Commission and its proposal published in mid-November. The group writes, “The EU Commission does not differentiate between mixed or hazardous waste and raw materials from recycling. Therefore, for the climate-friendly raw material steel scrap, high requirements have to be met when exporting to third countries, which creates competitive disadvantages compared to primary raw materials, which are imported with a high CO₂ footprint.”

BDSV continues, “Over 20 million metric tons of steel scrap are currently sold from the EU to third countries every year. In order to be able to use these quantities in Europe, capacities have to be expanded and manufacturing processes changed. How this could work in addition to concentrating on the expansion of hydrogen technology is being investigated by the new study ‘Scrap bonus in concrete terms’ by the Fraunhofer IMW institute on behalf of the BDSV.”

That study, an overview of which was presented at the conference, recommends a “scrap bonus must be integrated into the European price mechanism in order to act as an instrument for fair competition in the global value chains of steel production.”

Each ton of carbon steel scrap used saves 1.67 tons of CO₂ emissions compared with steel production from ores and coke, according to Fraunhofer. Thus, says the research institute, the social benefits associated with every ton of steel scrap as a “scrap bonus” is between 80 euros and 213 euros ($90 and $239) per ton of ferrous scrap used.

Unfortunately, Fraunhofer and its scrap study project leader Frank Pothen say, there are gaps in the European Emissions Trading System (EU-ETS) that stand in the way of a complete internalization of the scrap bonus, and these will not be closed by the current reform proposals of the European Commission.