The push to reduce carbon emissions will create “a large opportunity” to grow scrap’s share in current steelmaking beyond its current average of 30%, said McKinsey & Company’s Dr Steven Vercammen in a Bureau of International Recycling (BIR) webinar this week.

The key challenges are to extract more scrap from the system and to enhance quality, adds Vercammen, senior knowledge expert at the consultancy.

Having traditionally followed iron ore and coking coal trends, scrap prices are likely to “disconnect” as a result of “this whole decarbonisation pressure and the importance of using more scrap to be able to reduce CO2 emissions,” said Vercammen.

Prices of value-added scrap will increase, agreed Dr Benedikt Zeumer, McKinsey partner. 

“Recycled materials will be much more favourable in terms of CO2 emissions and probably also energy intensity,” he contends.

“A few years ago, there was concern that China might become a huge scrap exporting country, with the effect that it would hurt scrap prices around the world,” observes Scott Newell, chairman of US-based Newell Recycling Equipment and vice chairman of China Recycling Newell Equipment.

“The opposite is what is happening. China will need to import scrap rather than iron ore and coal in order to reach the goals of a cleaner environment and more cost-effective steel production,” he adds.