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Global steel scrap usage up further in 2017 on EAF rise: report

London — Global usage of ferrous scrap for steelmaking rose last year on highercrude steel output, the Bureau of International Recycling said in a reportpublished at its annual convention in Barcelona this week.

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Crude steel production grew 3.9% on the year in 2017 to 1.69 billion mt,mainly due to higher production through scrap-intensive electric arc furnaces.

While production of crude steel through basic oxygen furnaces (BOF)rose 2.3% to 1.228 billion mt, output from EAFs grew 8% to 445 million mt, thereport said.

This raised the share of crude output from EAFs globally to 26.3% lastyear, up 0.8% from 2016, with the overall proportion of steel scrapused for crude steel production at 35.5% in 2017.

Steel scrap consumption in the EU grew 5.6% on the year to 93.35 million,while US consumption grew 3.7% to 58.8 million mt.

Demand for steel scrap in Korea grew 11.3% to 30.3 million mt andJapan was reported up 6.6% on the year to 35.8 million mt. But the biggestsurge was in Turkey, up 17% to 30.3 million mt.

The report shows Turkish steel scrap usage rose 4.4 million mt, justahead of the 4.3 million mt rise in crude steel production, suggesting afurther replacement of other steel raw materials with scrap.

In Japan and Korea, such a replacement of steel scrap with other rawmaterials has been even more significant, with Japan's usage of steelscrap up 2.23 million mt despite a slight reduction in crude steeloutput with a wider trend for more ecological and sustainable steelmaking.

China remains the biggest consumer of scrap at 147.9 million mt. Butcomparative figures are difficult as steel scrap usage in induction furnaceswas not reported prior to 2016, the BIR report said.

Steel scrap usage in China is expected to grow significantly in comingyears as the country adopts more stringent environmental policiesand targets to produce "greener" steel that would increase EAF crude steelproduction from the current share of 6.5% of Chinese steel production. A recent analysis by S&P Global Platts shows such a replacement isalready taking place, with more EAFs in China having come online duringthe winter, raising the expected consumption of steel scrap.

With climbing consumption of steel scrap, prices rose roughly 28% onaverage in 2017, reaching levels for imports into Turkey around $360/mt CFRfor HMS 1/2 (80:20) in August last year, while prices for iron ore -- anothersteel-making raw material -- rose less quickly, Platts data shows.

As increased consumption of ferrous scrap in key regions were not fullymet by higher domestic supply, imports in those countries rose accordingly.

The world's largest scrap importer, Turkey, purchased around 21 millionmt in 2017 from abroad, up 18.4% on the year, covering around three quartersof the demand growth in the country with the other quarter from local supply.

Scrap imports by South Korea -- the second biggest global scrap importer-- rose 5.6% from 2016 to 6.2 million mt last year.

As in 2016, EU countries and the US remained the main exporting regionsof steel scrap in the world, with Turkey the main recipient.

EU exports grew 12.9% to 20 million mt, while US exports of ferrousscrap were 15 million mt, up 17.1% on the year, according BIR data.

--Pascal Dick, pascal.dick@spglobal.com

--Edited by Jeremy Lovell, jeremy.lovell@spglobal.com