India’s steel sector could see likely headwinds with the EU proposing to ban steel scrap exports, a key raw material in making the metal through the electric arc furnace route.

The Economic Survey notes that the proposed scrap ban “will significantly hinder developing countries’ capacities to produce more carbon efficient steel”.

In fact, it is being said, steel produced through electric arc furnace is less carbon emitting; as compared to steel produced through the traditional blast furnace route, which uses coal and iron ore as the key raw materials.

Per market data, average carbon emissions for steel produced through EAFs have an emission intensity of 0.4 to 0.8 tonnes of carbon dioxide per tonne of steel produced. In comparison, steel produced through the blast furnace route has a carbon emission intensity of around 2 tonnes of carbon dioxide per ton of steel produced.

The average carbon emission intensity across Indian steel mills is around 2.5 tonnes of carbon dioxide per tonne of steel produced.

India continues to be a major importer of steel scrap. Per industry sources, stainless steel scrap import was around 1.33 million tonnes, while mild steel scrap import was around 9-10 million last year. Majority of imports came from countries like Thailand, Europe, Indonesia, the US and Middle East, among others.

“Moreover, the proposed ban on steel scrap exports from the EU, a key input for steel production, will significantly hinder developing countries’ capacities to produce more efficient steel. This measure can be perceived as the EU attempting to enjoy the benefits of both sides while imposing trade restrictions,” the Survey noted.

Ensuring the availability of high-quality scrap in sufficient quantities is crucial for transitioning to green steel and supporting the future growth of the steel industry, it noted adding the Steel Scrap Recycling Policy encourages efficient recycling .

India’s Objections

Last year, India had raised objections to a Europe Union (EU) proposal to levy duty on export of (ferrous) scrap from member nations or ban export of scrap to non-OECD countries.

At a meeting of OECD (The Organisation for Economic Co-operation and Development) member countries, Indian officials, including representatives of Steel Ministry, have pointed out that such proposals are “a restrictive trade practice”.

India is not a member of the OECD. Globally, 73 countries have already banned or restricted scrap exports already.

“Countries like India face the twin challenge of achieving higher levels of economic development and dealing with climate change mitigation and adaptation,” it noted.

What EU’s New Rules Say

The Waste Shipment Management policy had mentioned that exports of “green-listed” waste are prohibited. Such exports may, however, still be allowed for non-OECD countries, if certain conditions are fulfilled.

The non-OECD countries still willing to receive waste imports from the EU must notify the European Commission of their willingness and demonstrate their ability to treat this waste in an environmentally sustainable manner. 

A list of countries authorised to receive green-listed waste will be drawn up by the Commission based on the assessment of country applications and exports to countries that are not included will not be allowed.

Waste exports from the EU is valued was around 35.1 million tonnes (this includes plastic waste) as on 2023, while recycled steel exports (scrap) were reportedly 18.5 mt, up 7 per cent y-o-y, as per Eurostat, Davis Index. Turkey is the largest buyer. For steel scrap, the EU exports around 20 per cent of scrap generated in the EU, due to insufficient uptake of steel scrap by European steel mills.

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