A Changing Landscape
At the 2023 MRAI International Business Summit in Bangkok, panelists discussed a novel trend developing in the stainless steel industry. Traditionally, nickel pig iron (NPI) has been used as melt shop feedstock mainly across Asia, with scrap stainless steel seeing higher usage levels in Europe and Asia. However, it appears that these patterns are shifting.
Tobias Kaemmer Offers Industry Insights
In an interview, the CEO of Oryx Stainless Group, which is based in the Netherlands and has been operational for roughly three decades, reported that Europe’s stainless steel production now uses around 94 percent scrap content. This figure has risen significantly since the company was first founded, as it began at a rate of around 55 percent.
Just 10 years ago, Oryx chose to establish operations in Thailand which was motivated by Kaemmer’s insight into Europe’s “protective system” of tariffs and taxes on stainless steel production. Over the same period of time, the stainless steel industry in Asian countries such as China, India and those located in Southeast Asia were also growing rapidly. In these facilities, owned by Chinese and Indian producers, nickel pig iron (NPI) produced from mined sources had become the primary material used in melt shops.
Impending CBAM Audit
Kaemmer mentioned that Europe has been shifting away from utilizing blanket tariffs and is actively searching for an alternative, such as a carbon border adjustment mechanism (CBAM). If a CBAM would be employed, however, it would lead to a notable import duty being applied solely to materials with a large carbon footprint.
He also stated that in anticipation of a CBAM, which features a potential audit starting in October, high-value investments are already being made.
Kaemmer highlighted the recent buy-out of a scrap-fed stainless melt shop in the United Kingdom by Marcegaglia S.p.A., an Italy-based stainless steel rolling mill operator. Also mentioning Chinese Tsingsha Steel shifting its focus and opening a production line “based on scrap” instead of NPI.
Kaemmer’s conclusion surrounding the implementation of CBAM systems in Europe and North America was clear, “This is a game changer, and it is closer than we all think.”
Additional Panelists Weigh In
India-based Jindal Stainless representative, Vishal Wadwha, asserted that utilizing just 1 ton of stainless steel scrap in the manufacturing process is capable of eliminating up to 4.3 tons of CO2 emissions, referring to scrap as “the champion for Scope 3 emissions” reduction.
Wadwha warned that as the world strives to reduce emissions, prices of crucial raw materials will inevitably reset. He stated that this will likely result in more ‘urban mining’ activities and may also create some ‘scrap nationalism’ protective measures.
Increased Output Recorded
Gopal Gupta, from India-headquartered Laxcon Steel Ltd., reported that he is extremely pleased with his company’s scrap suppliers as he plans to double the output of stainless long products. Gupta foresees Laxcon’s output to increase from 200,000 tons per year to 400,000 tons annually, using induction furnaces powered by scrap metal.
“We are very, very happy with our suppliers,” Gupta stated. “Out of 100 containers, we may have complaints about only one or two. The quality is much better than 10 years ago.”
Forecasts from Oryx’s Kaemmer suggest that the demand for scrap materials is set to continue its upward trend, as the public becomes increasingly conscious of the environmental benefits of recycled goods. Consequently, companies manufacturing items such as cars and washing machines are now targeting this “green” market by advertising products’ low carbon footprints and high levels of recycled content.
Reflecting on the increased utilization of NPI throughout Asia over the past 10 years, he stated “This reduced the cost but introduced more carbon in the atmosphere. There is now a [bigger] CO2 problem in the stainless sector that wasn’t there before, and I don’t think that’s a very smart development.”
Bangkok’s Marriott Marquis Queen’s Park hosted the MRAI 2023 International Business Summit on August 21-22.
