Steel Summit: US Scrap Industry Is Up to EAF Expansion Challenge

Written by Ethan Bernard

Leading voices in the US scrap industry discussed the current outlook and future challenges at Steel Summit 2023’s panel on Scrap and Metallics: Navigating the Boom in EAF Sheet Production.

Joseph Pickard, chief economist and director of commodities at the Institute of Scrap Recycling Industries (ISRI); Stephen Miller, Raw Materials Trader, Steelinvest Ltd, London; and Ben Abrams, president and CEO of Consolidated Scrap Resources, sat down with Lynn Lupori, head of consulting – Americas at CRU, to examine the landscape.

Miller noted that the war in Ukraine has impacted the flow of material, especially with pig iron. He said that 60-65% of material was from Ukraine, and now we’ve turned to Brazil, “but prices went up.”

Pickard said that the lack of Russian and Ukrainian material was supportive of boosting prices, but there are plenty of challenges on the domestic front to mitigate that. He cited the slowdown in US manufacturing over the last six or seven months, labor and hiring problems, rising interest rates, and transportation issues.

Abrams pointed out that “rail car shipping costs have really ballooned in the last two to three years.”

“Scrap flows are challenged,” Abrams said. “They are not as healthy as they were a year or two ago.”

He noted that, in opposition to the recovery from other downturns, “the price level scrap is stabilizing at is higher than in previous cycles.”

The reason behind this is in the name of the panel. “We need higher levels of scrap to feed the EAF production that has come online,” Abrams said.

“We’re going to have to use more pig iron and DRI (direct-reduced iron) for this added EAF production expansion,” Miller chimed in. “The expansion of prime scrap generation is not going to be there.”

He said that despite what steel mills say about scrap availability, “it’s not going to be a walk in the park.”

However, the panelists countered that although a challenge, it’s one the US scrap industry has the ability to face.

Despite other issues on the horizon such as regulatory challenges and the impact from possible trade restrictions, Pickard said “recycling is incredibly resilient to changing market conditions.”

“Scrap becomes available as the market dictates,” he added, noting that he believes market conditions will tighten going forward.

Pickard said the overall outlook, both domestically and globally, is about sustainable production, and “scrap is a huge part of that solution.”

Miller said the US scrap industry is “extremely efficient,” and “has always found a way to make material available no matter what the mills wanted to pay.”

“We’ve never run out of scrap,” Miller added. “It’s a function of price.”

Correction: An earlier version of this article erroneously listed Stephen Miller’s title and organization. The correct title and organization are Raw Materials Trader, Steelinvest Ltd, London.

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