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FEATURE: Revised EU waste shipment rules likely to start in 2024, impacting scrap exporters


Restrictions on ferrous scrap exports to start in 2027

Concerns about low-residual scrap supply for low-carbon steel

Larger EU countries favor stricter scrap export restrictions

  • Author
  • Viral Shah
  • Editor
  • Manish Parashar
  • Commodity
  • Electric Power Energy Transition Metals
  • Tags
  • Flat steel copper

The revised European Waste Shipment Regulation is expected to enter into force in 2024, according to Emmanuel Katrakis, secretary general of the European Recycling Industries' Confederation, and this would put stricter burdens on EU scrap exporters.

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The Council of the European Union is expected to present and adopt its fully revised proposal for the regulation May to June, Katrakis said April 27 at the German Federal Association of Secondary Raw Materials and Disposal conference in Hamburg, Germany.

"Several larger EU countries with more scrap supply currently are tending to support stricter export restrictions, while smaller EU countries are more in favor for more balanced export restrictions," Katrakis said.

Once the Council has finalized its compromise position, then trialogue negotiations will kick-start between the EU Parliament, the European Commission and the Council, which should conclude in a matter of months.

"We expect the final text to be adopted in 2024, the very latest," Katrakis said.

In attempting to ensure availability of high-grade scrap within the EU as a part of the bloc's decarbonization goals, the revised Waste Shipment Regulation, or WSR, aims to restrict exports of EU-origin scrap to countries that don't have EU waste treatment standards and would be obliged to conduct independent audits of their processing facilities. Cross-border shipment of waste between EU nations would be facilitated for reuse, recycling or disposal.

The EU Parliament published its negotiating position for trialogue discussions in January, which includes a proposal for restrictions of ferrous scrap exports only to non-OECD countries on a yet to be determined approved list.

Stricter export rules seen by 2027

The expected application of more stringent export rules for ferrous scrap, as well as the proposed facilities audit for non-OECD scrap buying countries, is now expected in 2027, following a three-year transition period, Katrakis said.

"The issue with the proposed audit of non-OECD scrap recycling facilities is you cannot ask a facility based outside of the EU to comply with standards set in the EU," Katrakis said. "But according to the proposal, European scrap exporters have to prove that the buyer will be in a country on the approved non-OECD list and has facilities equivalent to EU standards."

As the WSR proposal has been shaped, EU steel producers have pushed for stricter export restrictions to to secure scrap supply, with greater scrap consumption expected in the shift to low carbon emission steelmaking.

Previously, EU scrap recyclers have voiced concerns that potential export restrictions will reduce the commercial incentive to collect and recycle ferrous scrap, as well as drop the price of ferrous scrap within the EU.

Recyclers also have suggested that restrictions may largely impact exports of lower quality scrap grades like heavy melting scrap, which cannot be wholly consumed within the EU, even if scrap consumption increases in the decarbonization drive.

The EU is the world's largest exporter of ferrous scrap, with 2021 outflows reaching 19.5 million mt, according to Eurostat data.

Near-term scrap quality concerns

The supply of low-residual, high-quality ferrous scrap is under threat amid current steel production and recycling processes, Jeremy Jones, managing partner and steel consultancy CIX, said at the Hamburg conference, known by its German acronym as the BSVE.

EU steel mills looking to switch from blast furnace-based production to electric arc furnace-based production in the near future as part of the EU-led decarbonization drive, will require such scrap, which is low in contaminants such as copper.

"The increased demand within the EU for scrap will mostly come from new EAF-based flat steel production, while export demand for EU-origin ferrous scrap should mostly still come from long steel producers based in Turkey and elsewhere," Jones said.

"It's really important to preserve low-residual scrap but sometimes EU recyclers, who need to fulfil a supply contract with a mill, may blend high-quality low-residual shredded scrap with shred from other obsolete sources, and this raises the level of copper, which is bad for flat steel production," Jones said, noting that blended shredded scrap generally contains 0.25%-0.3% weight copper, compared with high-quality shredded scrap that has around 0.15%-0.17% weight copper.

Copper demand to grow

As demand for electric vehicles grows alongside the EU's decarbonization drive, these cars are likely to contain three-six times more copper, which could mean that shredded scrap from these sources, if the free copper is not removed during dismantling, could have as much as 1% weight content of copper. Such a possibility would strongly limit shredded scrap's reuse for high-quality flat steel production in the EU, Jones said.

If low residual scrap supply is not conserved, EU flat steel mills are likely to need more direct-reduced iron in their raw materials production mix. However, the technology to produce low carbon DRI is still at a nascent stage, which means the carbon footprint of the finished steel may be difficult to reduce in the short term.

More considered design of steel-based products is required to ensure better quality recycled components at end-of-life, as well as stronger commercial incentives for recyclers to remove copper and other residuals, Jones said, adding that "when copper scrap prices are high, processors do a better job of removing it."

The global copper market in 2035 could see a deficit of up to about 1.5 million mt in the high-ambition supply scenario and up to a 9.9 million mt deficit in the rocky-road supply scenario, according to joint S&P Global Commodity Insights-S&P Global Market Intelligence report from July 2022. Concerns over tightening future copper supply, despite an expected surplus over 2023-24, according to Market Intelligence, may support more efficient extraction and recycling of copper from ferrous scrap.