Demand for scrap metal expected to grow in next two decades – report

Scrap metal. (Image by Alexas_Fotos, Pixabay).

A report published by Wood Mackenzie this week states that since consumer and investor pressures asking for recycled content are starting to change the scrap metal market, demand for this material is expected to grow in the next two decades, with an additional 200 Mt per annum of steel scrap and 75 Mt per annum of aluminum used by 2040 compared to now.

Beyond what happens in the private sector, policies that mandate greater recycling rates are also driving cleaner and more reusable scrap collection.  

“Governments across the globe generally share a focus on keeping reusable materials out of landfills,” WoodMac’s principal analyst, Renate Featherstone, writes in the report. “These should, in theory, lead to greater scrap availability and use. However, there are no universal laws that encourage the consumption of recycled materials.”  

Policies that mandate greater recycling rates are also driving cleaner and more reusable scrap collection

According to Featherstone, the fact that there isn’t a global vision on the use of scrap metal means that, despite the increased demand, the material is still expected to remain underutilized compared to its overall availability.

“Europe, for instance, collects scrap but does not have enough scrap-smelting capacity to use all the scrap generated,” the document reads. “Consequently, vast quantities of scrap are exported. Unverifiable quality for end-of-life scrap has deterred higher scrap use. But solid waste management laws are tightening, leading to increased scrap separation and quality monitoring.” 

For the market analyst, in addition to policy changes, the wide-scale use of scrap metals must go hand-in-hand with compelling incentives and quality assurance.

“Wood Mackenzie believes a strong economic rationale exists for greater scrap processing and use. Capital investment costs for aluminum scrap processing facilities are typically 10% of primary metals, and 50% or less for steel,” the report states. “From an environmental perspective, secondary aluminum production has a carbon footprint five to 25 times lower than primary metal production. For steel, the largest industrial emitter, emissions can be around 30% lower compared to today, despite growing demand.”

The UK-based firm estimates that using all available scrap could bring down aluminum and steelmaking emissions by up to 600 Mt a year each and that if a universal carbon tax rises to $110/tonne, each relevant industry could save $66 billion a year. 

Despite these positive outcomes, WoodMac points out that even with increased availability, scrap cannot eliminate the need for primary metal. 

“Mining, refining and smelting will remain part of our lives for many decades to come,” the report states.  

9 0