Recycling: The route to decarbonisation
Steel Insights|October 2021
India, the second-largest steelmaker in the world, is also the second-largest importer of steel scrap. Surely India fares poorly in terms of scrap generation and consumption despite steel being the most recyclable metal in the world.
Sumit Maitra & Tamajit Pain

Not only can steel products be reused and remanufactured, steel is also a permanent material, which can be recycled over and over again without losing its properties.

Domestic scrap demand is estimated at around 25-28 million ton (mt) with import being 5.57 mt.

In contrast, with steel output touching 1 billion tons, consumption of scrap by China’s steelmakers has increased from 90 mt in 2016 to 230 mt in 2020, with an average annual growth rate of 9.8 percent.

Growing domestic steel-making capacities and phasing out unfit and polluting vehicles will generate more scrap.

Usage of scrap in steelmaking is gaining importance with the necessity to reduce the usage of fossil fuel, mainly coking coal, in steel production.

Also, the conventional steel-making process is giving way to Green Steel using inputs like hydrogen, bio-waste or steel scraps.

Recycling 1 ton of scrap saves 1.1 tons of iron ore, 06-0.7 ton of coking coal and around 0.2-0.3 ton of fluxes.

Besides, specific energy consumption is also reduced drastically as the requirement of energy for production of steel through primary and secondary routes is 14 Mega Joules/Kg and 11.7 MJ/ Kg respectively.

It leads to savings in energy by 16-17 percent. It also reduces water consumption and GHG emission by 40 percent and 58 percent respectively.

Decarbonisation initiatives

The industry needs to cope with the pressure to reduce its carbon footprint from both environmental and economic perspectives. Currently, the steel industry is among the three biggest emitters of carbon dioxide, making steel plants good candidates for decarbonization.

While the industry must adapt to these new circumstances, it can also use them as a chance to safeguard its license to continue operating in the long term.

In various industries including the auto industry, manufacturers have the ambitious aim of eliminating carbon emissions completely from their entire value chains (including their suppliers) and taking on a full life cycle perspective.

The Institutional Investors Group on Climate Change, a global network with 250-plus investors and over trillions of dollars in assets under management, has raised expectations for the steel industry to safeguard its future in the face of climate change.

At the same time, global investment firm BlackRock has confirmed its commitment to environmentally responsible business development and sustainable investing.

Technology landscape for decarbonisation in steel production

Going forward, steel producers need to assess, evaluate, and decide on a technologically and economically viable way to decrease their carbon footprint.

Steel can be produced via two main processes: either using an integrated blast furnace (BF)/basic oxygen furnace (BOF) or electric arc furnace (EAF).

While integrated players produce steel from iron ore and need coal as a reductant, EAF producers use steel scrap or direct reduced iron (DRI) as their main raw material.

Although BF/BOF efficiency programs and biomass reductants can be evaluated, but such programs are not fully comprehensive.

Effective measures: Carbon capture and storage/higher share of scrapbased EAFs

This process maximises secondary flows and recycling by melting more scraps in EAFs. EAF producers are more environmentally friendly and flexible to the ups and downs of demand.

However, shifting to EAF-based steel production requires the future supply of renewable electricity to be commercially available, as well as a sufficient supply of high-quality steel scrap.

High-quality scrap is necessary for the production of high-quality products, which are nowadays mainly produced through the integrated route. If high-quality scrap is not available, lower-quality scrap can be mixed with DRI to ensure a high-quality EAF input.

Increasing the share of EAF-based steel production will play a key role in decarbonizing the steel industry. However, this role will be dependent on the regional availability of high-quality scrap and could therefore be limited in regions with an inadequate supply of high-quality scrap, making other technologies a must. Increasing demand for high-quality scrap will also lead to extra cost for EAF-based steel production.

DRI and EAF using hydrogen

This uses green hydrogen-based DRI and scrap in combination with EAFs. The process replaces fossil fuels in the DRI production stage with hydrogen produced with renewable energy. It represents a technically proven production method that enables nearly emission-free steel production.

BF/BOF efficiency programs only result in a reduction in carbon dioxide emissions without eliminating them entirely.

The share of EAFs producing high-quality steel will increase but requires the availability of scrap and DRI. Hence, adopting an approach combining scrap, DRI, and EAF using hydrogen is currently considered the most viable option and the long-term solution to achieving carbon-neutral steel production.

Scrap requirement to rise

Scrap-based steel-making technologies have been envisaged as one of the important options to reduce GHG emission intensity. Hence, the focus of several governments, including the Indian government, is towards increasing the consumption of scrap in the steel making process.

The National Steel Policy (2017) envisages 35 percent–40 percent production through EAF/IF route, of the targeted 300 mt of steel production by 2030.

According to estimates, scrap consumption will grow steadily and by 2030 the consumption will grow by over 100 percent from the actual consumption of 30 million tons in 2020.

It is therefore evident that the steel scrap market will grow and with the advent of ELV framework, the growth will be still more robust.

Scarp market size

Global

The demand of steel scrap has increased considerably in the past globally from 367 mt in 2000 to 591 mt in 2020. As per estimates of World Steel Association, global ferrous scrap availability is expected to reach 1 billion tons in 2030. The largest sources of melting scrap are the USA, UK., Rest of Europe, SA, UAE and Australia.

India

At present, against a generation of 112 mt of steel, the country requires 30 mt of scrap. Out of the 30 mt scrap, 5 mt is imported due to a deficit in the domestic market. Scrap requirement is expected to be about 70 mt by 2030 considering the potential rise in EAF/ IF capacities if steel policy targets are met. At present, there are 1,128 IFs and 47 EAFs spread across the country.

India scrap imports

In the April-August period of FY22, the country imported 1.998 mt of scrap as against 1.961 mt in the same period previous fiscal, according to provisional steel ministry data.

Re-rollable scrap imports were 50,000 tons during the period as against 40,100 tons in the same period previous fiscal, the data showed.

The market for imported scrap in India has been reporting active trade deals in recent times owing to the rise in the domestic scrap purchase price.

Domestic scrap prices have been rallying on prevailing improved sentiments, and increasing prices for substitute material like sponge iron, supported by high coal prices.

UK origin material prices for HMS 1&2 (80:20) rose to $479/ton CFR Nhava Sheva as against $469/ton CFR a week ago.

UK origin shredded material traded at $514/ton CFR Nhava Sheva.

Recently, a decent quantity of South Africa origin HMS 1&2 (80:20) has been booked at $479/ton CFR levels.

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