Scrap Outlook Points to Steel Recovery

The scrap steel industry was hammered by the global economic meltdown, leading to a steep decline in global supply, but a significant rebound is projected in a new report from California-based Global Industry Analysts.

Steel scrap consumption is expected to rise to 631.5 million metric tons by 2015, according to GIA, because improving sales in the automobile industry and enhanced construction activity are expected to increase the supply of used steel and fuel demand for new steel products. Steel scrap’s favorable impact on the environment is also expected to boost consumption levels.

Asia-Pacific and Europe account for more than 70 percent of global steel scrap consumption, and rising demand from China, India and Brazil for materials used in steel making is expected to fuel demand for steel scrap.

While China leads the world market in the production of steel, China’s steel industry suffered from a steep decline in foreign demand in 2008 and 2009. As the global demand for steel picks up, China’s production should increase.

Investment in new steel mills that use electric arc furnace technology is also expected to increase demand for steel scrap. European companies using electric arc furnace technology, which uses steel scrap as the primary raw material for the manufacture of steel, accounted for over 40 percent of all steel production, and that proportion will increase as new plants become operational.