Is this the end of free scrap trade in the world?

The full text of GMK Center’s study “Restrictions on Scrap Exports in the World 2025” is available here.

The EU Steel and Metal Action Plan approved in March 2025 envisaged that European Commission will consider additional scrap export restrictions by 3Q 2025. Idea of restricting scrap exports is not new for the EU – in March 2024 European Council adopted changes to Waste Shipment Regulation, which limit exports of non-hazardous waste, including scrap, to non-OECD countries. New export rules will enter into force in May 2027, and they will act like technical barrier as non-OECD countries submitted appropriate documents will be able to continue scrap imports from the EU.

Inclusion of scrap exports restrictions in the EU Steel and Metal Action Plan became possible after discussion between local stakeholders. This discussion is quite similar to discussion concerning scrap exports restrictions in Ukraine. On the one side, European steel associations stress need to keep scrap within EU to recycle it domestically as scrap is viewed as a strategic resource for decarbonization. So, it is necessary to secure enough scrap supply for domestic needs.

European steel associations even discuss scrap leakage as a separate phenomenon. Scrap instead of local consumption is exported to third countries, some of them provide subsidies to expand recycling capacities, creating unfair competition and contributing to global steelmaking overcapacity. Steel producers in such third countries can afford to pay higher prices for scrap, that leads to its leakage. This situation jeopardizes European green transition and decarbonization.

On the other side, representatives of scrap collectors – the European Recycling Industries’ Confederation (EuRIC) and the Bureau of International Recycling (BIR) – oppose any restrictions on scrap exports, arguing that such measures would harm recycling (scrap collecting) businesses globally. European steel producers are well supplied with scrap and its availability is not a problem: 80% of collected scrap is used domestically, while the remaining part is exported because of insufficient domestic demand. So, there is no “scrap leakage” and continuing scrap exports is necessary to keep businesses of recyclers (scrap collectors) alive.

Going deeper, this discussion is not only about the interests of different stakeholders, but also about fundamentals of scrap demand and supply. Global demand for steel scrap is projected to rise by nearly 50% by 2050. As steel industry moves toward decarbonization, steel producers in major scrap-generating regions, including the EU and USA, are expected to increase their scrap usage. At the same time, leading steel-producing countries like China and India will also boost their scrap consumption. European and other countries express concerns about the availability of domestic scrap for meeting domestic needs amid rising scrap demand globally.

These concerns are confirmed by some forecasts. For example, Boston Consulting Group estimates that growth of global scrap demand will outpace growth of global scrap supply. As a result, scrap market could face 15 mln tons deficit in 2030 instead of surplus which is observed now (9 mln tons).

According to our estimates, in 2023 global scrap consumption amounted to 650 mln t. Only 15% of this volume was supplied through global trade (exports & imports). 54% of global scrap demand is met by local merchant supplies. Considering effectiveness of steelmaking processes, there is no big potential for increasing generation of home scrap at steel plants. So, local supplies will remain the main potential source of meeting scrap demand in the future and different countries are already concerned about ensuring enough domestic scrap supplies and avoiding an increase in scrap exports.

Also, decarbonization plans of European steelmakers are largely focused on building new EAF capacities. Based on publicly announced projects, EAF capacity in the EU is expected to grow by at least 60% compared to 2024 level. For European Commission it could be an additional argument for introducing new scrap exports restrictions.

Implementation of scrap export restrictions in the EU (major scrap exporter) will become a trigger leading to implementing similar restrictions in other countries. In this case the number of scrap exports restrictions will be increasing. It could become a new norm to introduce scrap exports restrictions to reach climate or circular economy targets. Scrap exports restrictions could become instrument supporting competitiveness of domestic “green” steel industry. Differences between local and global prices for scrap may become usual, while scrap will be gradually losing status of export commodity.

Ukraine has its own history of scrap exports restrictions (quotes, duties, licensing). There are different opinions concerning their necessity and impact. Now the Ukrainian Ministry of Economy is considering introduction of zero quota for scrap exports. It is obvious that making decisions regarding any scrap exports restrictions should be based on consultations with different Ukrainian stakeholders to protect interests of Ukrainian economy.

On the other side, Ukrainian authorities should also consider European and global landscape. Ukraine is a player on global steel and scrap markets, so Ukrainian economic policy should consider long-term trends there. Ukraine also intends to become member of the EU. In fact, Ukraine is already part of European economic space, so Ukrainian regulations should be aligned with European policies to make further European integration easier.