Circular Transformation of the European Steel Industry Renders Scrap Metal a Strategic Resource

The steel industry is a significant contributor to global CO2 emissions, accounting for 7% of emissions. The European steel industry aims to reduce emissions by transitioning towards electric arc furnaces (EAFs), which can produce steel from scrap, a crucial step towards a circular steel economy. This paper uses trade and business intelligence data to show that this shift necessitates a profound restructuring of global and European scrap trade and a significant expansion of the business ecosystem. We find that scrap imports in European countries with major EAF installations have steadily decreased since 2007, while global scrap trade has recently increased. Statistical modeling indicates that for every 1,000 tonnes of EAF capacity installed, annual scrap imports increase by 550 tonnes and exports decrease by 1,000 tonnes, suggesting increased competition for scrap metal as EAF capacity expands. Furthermore, each scrap company supports around 79,000 tonnes of EAF-based steel production per year in the EU. Extrapolating current EAF expansion plans, we estimate that an additional 730 companies may be required, creating approximately 35,000 jobs and generating USD 35 billion in turnover. This analysis suggests that scrap metal is likely to become a strategic resource, highlighting the need for a major restructuring of the industry's supply networks and identifying growth opportunities for companies.