Morning Brief: Global scrap
consumption in steel-making (excluding foundries) increased by around 12% in
2021 to 620 million tonnes from 548 mnt in 2020, reveals SteelMint research.
It may be noted that 2020 was a year of flux as it
saw the onset of Covid and thus crude steel production went up a mere 10 mnt
and scrap usage dropped compared to 2019.
However, 2021 saw a resurgence in ferrous scrap usage
as a feedstock. Data reveals that in 2021, the share of scrap in crude
steel-making increased to 32% in 2021 from 30% in 2019, while it had dropped a
tad to 29% in 2020.
In 2021, the total crude steel produced amounted to
1,951 million tonnes (mnt). In 2019, the share of ferrous scrap usage comprised
568 mnt in the entire quantum of 1,870 mnt of crude steel produced. In 2020,
548 mnt of scrap was used in producing 1,880 mnt of crude steel.
China used a lion's share of 245 mnt or almost 40% of
the 620 mnt for making its 1,033 mnt of crude steel in 2021. Its share of scrap
usage went up in 2021 by 24% compared to 21% in 2020 and 22% in 2019.
The EU produced 152.5 mnt of steel last calendar in
which scrap consumption comprised 88.5 mnt. In 2020, in the 139 mnt of crude
steel produced, scrap consumption was at 77.5 mnt and in 2019, the figures were
at 111.40 mnt and 86.50 mnt respectively.
Many of the other key steelmakers also upped their
Reasons for increase in ferrous scrap's share?
hogs lion's share: The maximum increase
in ferrous scrap consumption in steel-making is happening in China, reveals
SteelMint's data. The share has gone up to 24% in its 1,033 mnt of crude steel
production in 2021 from 21% (1,065 mnt) in 2020 and 22% (1,001 mnt) in 2019.
Previously, the scrap share was at 10-12% but
obviously China is making serious efforts to increase green steel-making in a
bid to achieve its carbon neutrality goals. It has set targets of achieving 30%
share of scrap feed by 2025, carbon peaking by 2025 and net zero by 2030.
focus on green goals: Decarbonisation is a
major issue globally and all the other countries are also attempting to
increase share of EAFs which use ferrous scrap as raw material. For instance,
the EU, the second-largest steel manufacturing geography after China, has seen
the share of scrap consumption going up steadily to 58% in 2021 from 56% in
2020 and 55% in 2019.
The US has always stressed on the electric route of
steel manufacturing and its share has remained at an overwhelming 69-70% over
scrap usage to rise gradually: India is, however, an
exception since its usage of scrap as a stockfeed will continue to remain
range-bound for some time before it rises sharply, because it is a developing
country and requires steel on a mass scale. As a result, several more blast
furnaces are being set up. The current BF-BOF:EAF-EAF ratio of 45:55 will
change to 55:45, going forward. This is not to say that India's scrap
consumption is dropping. The share, compared to iron ore, has risen to 20% in
2021 from 18% in 2019. And this is set to rise too as the government is being
proactive. The vehicle scrappage policy will encourage auto scrap generation
while Tata Steel and M&M and others have entered the scrap generation
space. More dismantling centres are coming up. Larger mills like AM/NS India,
and JSPL are using the EAF route too while Tata Steel has also shown interest.
The CO2 per tonne of hot metal (thm) produced in
India through the BF route is around 2.3 tonnes. Emissions through the EAF
route in general is around 0.5-0.8 t per tonne of hot metal produced, taking
into consideration the lifecycle emissions, noticeably lesser than the BF route's.
For EAFs, the emissions also depend on the feed ratio of DRI and scrap.
The 32% share in 1,951 mnt of steel being made
through the ferrous scrap usage route will increase as the world moves ahead
with its decarb goals.
Scrap is not only emerging as a key steel-making raw
material, it is also becoming a regional commodity. Going forward, most
countries would focus on domestic consumption of the material and not be too
keen on exports of the same.