Circular transformation of the European steel industry renders scrap metal a strategic resource

Peter Klimek, Maximilian Hess, Markus Gerschberger and Stefan Thurner

Papers from arXiv.org

Abstract: The steel industry is a major contributor to CO2 emissions, accounting for 7% of global emissions. The European steel industry is seeking to reduce its emissions by increasing the use of electric arc furnaces (EAFs), which can produce steel from scrap, marking a major shift towards a circular steel economy. Here, we show by combining trade with business intelligence data that this shift requires a deep restructuring of the global and European scrap trade, as well as a substantial scaling of the underlying business ecosystem. We find that the scrap imports of European countries with major EAF installations have steadily decreased since 2007 while globally scrap trade started to increase recently. Our statistical modelling shows that every 1,000 tonnes of EAF capacity installed is associated with an increase in annual imports of 550 tonnes and a decrease in annual exports of 1,000 tonnes of scrap, suggesting increased competition for scrap metal as countries ramp up their EAF capacity. Furthermore, each scrap company enables an increase of around 79,000 tonnes of EAF-based steel production per year in the EU. Taking these relations as causal and extrapolating to the currently planned EAF capacity, we find that an additional 730 (SD 140) companies might be required, employing about 35,000 people (IQR 29,000-50,000) and generating an additional estimated turnover of USD 35 billion (IQR 27-48). Our results thus suggest that scrap metal is likely to become a strategic resource. They highlight the need for a massive restructuring of the industry's supply networks and identify the resulting growth opportunities for companies.

Date: 2024-06
New Economics Papers: this item is included in nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2406.12098 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2406.12098

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().