The European Commission proposes restricting ferrous scrap exports to non-OECD nations. This policy threatens to disrupt global trade flows. It also alters raw material supply lines for overseas steelmakers. The draft comes under the revised EU Waste Shipment Regulation. It excludes key importers like Egypt, Morocco, India, Pakistan, and Bangladesh. These nations cannot receive EU non-hazardous waste after May 2027. A public consultation runs until October 16. Industry groups like the Bureau of International Recycling urge stakeholders to submit evidence. Early feedback could help mitigate potential market volatility.
High Exposure in North African Steelmaking
North African steel producers face immediate operational risks. This stems from their heavy reliance on European ferrous scrap. Morocco and Egypt rely on scrap-heavy electric arc furnaces to produce steel. They frequently re-export finished products to Europe. Moroccan mills source nearly 100% of imported ferrous scrap from the EU. Local producers have limited domestic substitutes. Technical constraints also restrict direct reduced iron usage.
In 2025, EU scrap accounted for nearly 80% of Egypt’s total scrap imports. Egyptian buyers are now seeking alternative suppliers. Primary options include the United Kingdom and the United States. However, competition for non-EU scrap sources will intensify. This trend will raise freight and procurement costs for regional mills. Higher input costs could push up finished steel prices.
South Asian Markets Accelerate Supply Diversification
Unlike North African importers, South Asian steelmakers possess broader supply networks. These networks are capable of absorbing policy shifts. India and Pakistan maintain diversified sourcing models. They balance European tonnage with shipments from the Middle East, Asia, and North America. This flexibility gives South Asian buyers clear options. They can replace EU material if trade restrictions take effect.
Bangladesh serves as a clear benchmark for rapid market realignment. In 2022, Bangladesh sourced over 30% of its ferrous scrap from the EU. By 2025, local mills shifted almost entirely away from European scrap. Suppliers in Japan, Australia, Singapore, and the US absorbed this demand. This shift demonstrates how trade channels adapt when regulations change.
Potential Trade Shifts and Domestic European Surplus
If export limits pass, ferrous scrap will shift to accessible markets. Key destinations include Turkey and domestic European mills. A European surplus could temporarily suppress domestic scrap prices. At the same time, it increases scrap availability for green steel initiatives. Conversely, excluded non-OECD buyers face higher raw material costs. They must compete for limited supply from alternative exporting nations.
Market Impact
○ Impacted Metals: Heavy Melting Scrap (HMS 1&2), shredded scrap, EAF scrap feedstocks, carbon steel scrap
○ Direction: Volatile
○ Time Horizon: 2026–2027
○ Affected Industries: Steelmaking, metal recycling, electric arc furnace (EAF) steel production, international shipping
○ Related Price Reports: Stainless Steel Weekly Price Report
○ Watch Item: Global steel and scrap market participants should monitor the public consultation closing on October 16 for potential amendments to the authorized importer list.
SuperMetalPrice Commentary:
The European Union’s proposed restrictions on ferrous scrap exports represent a fundamental shift in regional resource nationalism under the guise of circular economy regulation. While the policy aims to retain secondary raw materials within Europe to support green steelmaking, it risks destabilizing key international supply chains that rely on European scrap for low-emission EAF production.
In the near term, North African mills will bear the brunt of procurement challenges, forcing them to compete aggressively for UK and US material. Over the long run, this policy could fragment global scrap benchmarks, creating localized price discounts within Europe while driving up raw material costs for non-OECD steelmakers.
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