The global steel scrap market will be dominated by Asia by 2020, accounting for over 40 percent of global trade in the commodity by volume, according to the latest research study released by Technavio, a global technology research and advisory company.
Asia is expected to trade over 258 million metric tons of steel scrap in 2020, out of global trade totals of 633 metric tons, according to the Technavio research.

One of the drivers for the growth of steel scrap as an input to the production of new steel in Asia has been the ban on nickel exports from Indonesia. “Nickel ore is widely used for the production of steel in China, which is one of the largest consumers of steel,” explained BJ Chandrakumar, one of Technavio’s lead analysts for metals and minerals research. “The ban on exports by Indonesia has led to a shortage of raw materials. Thus, the use of steel scrap as raw material for the production of steel is increasing.”

In addition, the production of steel has expanded in several countries like Qatar, Saudi Arabia, and Kuwait.

The sources of steel scrap are divided into three segments: obsolete scrap, prompt scrap, and home scrap. According to Technavio analysis, by volume, the global obsolete steel scrap market accounted for over 284 million metric tons in 2015. The global prompt steel scrap market accounted for a little over 134 million metric tons in 2015.

The Technavio report did not provide an estimate for the volume of home scrap. Advances in technology have significantly reduced the amount of home steel scrap produced over the years. Home steel scrap is generated within steelmaking mills and foundries and includes left-over pieces of steel from steelmaking, steel and iron recovered from slag processing, and rejected or defective products at the mill, such as side trimmings, crop ends, and other process-related yield losses.

Obsolete scrap is derived from post-consumer products of various industries after the end of product life. These industries include automobiles, appliances, ships, and bridges.

Prompt steel scrap, also called new or industrial scrap, is generated during the manufacturing of steel products. Examples of prompt steel scrap include punched-out pieces of sheet from the manufacture of appliances, skeleton scrap from the production of can ends, turnings from the manufacture of screws and bolts, bumpers at auto stamping plants, and side trimming from the manufacture of hoods. It is sold to the scrap metal industry, which further sells it to steel mills and foundries after processing.

Steel scrap is present in various quality grades, which can be used for numerous purposes. The presence of contaminants lowers the quality of scrap and makes it difficult for separation. “However,” added Chandrakumar, “plants have developed the ability to derive better quality from lower grade steel scrap. These advances have led to an increase in the use of lower quality grades, thus driving the growth of the global steel scrap market.”