From 2000 to 2010, world crude steel production rose continuously. In 2010, global crude steel production totaled 1,414 million tonnes, an increase of 15% from 2009. This was a significant pickup when compared to the average annual growth rate of 5% in the last ten years. Around 44% of the total production was from China and 56% from other countries. China crude steel output rose tremendously from 2000 to 2010 by an average rate of 17% per year. However, the growth rate slowed down in 2010 to 9.3% y-o-y. This could be a result of the restructure of steel industry in the country.

Source: World Steel Association

In tandem with the increase in crude steel production, world crude steel consumption registered a continued growth since 2000. However, world scrap trade did not follow such a pattern. It reached a plateau in 2004 and has stagnated since then. In fact, total scrap trade was estimated to have declined by 17% y-o-y in 2010. Scrap export from USA , the largest scrap exporter, was estimated to have declined substantially by 28% in 2010. Scrap export from Russia estimated at above 1 million tonnes in 2010 was a decline from 7.9 million tonnes in 2007. Export from Japan , one of the major scrap sources in Asia , reduced by 37% to around 5.9 million tonnes in 2010. Export from Netherlands dipped by 21% to an estimated 3.6 million tonnes in 2010. However, export from U.K. and Germany surged slightly by 2% and 3% to around 6 million tonnes and 7.5 million tonnes, respectively.

Source: World Steel Association, SEAISI estimation

Source: OECD

Despite a critical scrap supply situation in the world market, some countries that are heavily dependent on imported scrap are expanding EAF capacity dramatically. According to OECD, total steelmaking capacity expanded rapidly since 2000, rising from 1,071 million tonnes in 2000 to 1,792 million tonnes in 2009. Chinese steelmaking capacity increased from 150 million tonnes in 2000 to 725 million tonnes in 2009. Other Asia (non-China) steelmaking capacity registered 146 million tonnes in 2009, a rise from 91 million tonnes in 2000. Between 2009 and 2012, OECD foresees that world crude steelmaking capacity will increase by 13.1% to 2,027 million tonnes. According to the Steel Manufacturers Association, Turkey plans to increased EAF capacity by 8.8 million tonnes by 2015.

OECD also remarked that there could be an excess of world capacity by more than 500 million tonnes in each of the next few years if world consumption continues to grow by 5% in 2012.

It is foreseen that the shortage of scrap supply is getting more serious. As a result, there could be a scrap export control implemented by many countries to ensure adequate supplies within the country.

Production of the material from scrap consumes less energy and has less environmental effects (such as pollution). Each country will have to rely on their domestic supply of scrap by increasing domestic availability of scrap within the country. Moreover, countries that are dependent on imports of scrap should balance its EAF capacity expansion with their ability to access scrap supply.

Source: SEAISI