Final Thoughts
July 31, 2026
Final Thoughts: Scrap trends in the international market
Written by Stephen Miller
Lately, the scrap and steel industries have been engaged in a theoretical discussion about the long-term value and trade of ferrous scrap. As electric-arc furnace (EAF) melting proliferates throughout the world for both economic and ecological reasons, the question is whether price and availability of scrap stay within reach for steel-producing countries that rely on scrap imports.
During the last two decades, the industry has seen a move away from integrated steelmaking to the EAF method in North America and Europe and partially in India and the MENA region.
As we all know, these furnaces use scrap iron and steel as their main melting stock as opposed to iron ore. Over time, as this conversion evolves, there will be more demand for scrap.
Countries that are net exporters of scrap will see a significant reduction in export volumes as this material will be needed by their domestic steel industry. Where will net importers obtain their material? And at what cost? Will they be able to afford to import scrap and turn a profit on the type of steel products they produce?
To answer these questions, let’s review the scrap distribution dynamic. The main scrap exporters are the US, UK, Benelux nations, European Baltics, Japan, and—to a lesser extent—Russia. Other minor exporters are South Africa, Chile, Hong Kong, and Australia. These nations mainly feed steelmakers in South and Southeast Asia. They also compete with China exports of new and semi-finished steel for market share.
Turkey
But for the European and transatlantic scrap trade, let’s consider the situation in Turkey. The steel industry in Turkey produces mainly long products, mostly rebar. The market prices for rebar and other longs in their domestic and export markets are capped to a certain extent for a variety of reasons. This leaves them very little room for reasonable margins unless their rebar market has a casual correlation with the price of scrap.
As the US continues to bring on more EAF capacity and the EU transitions to more EAFs as it pursues decarbonization, the internal demand for scrap will continue to rise. This will mean less exports, or at least higher export prices on a delivered basis to Turkey.
The US has seen their exports shrink from 15-20 million metric tons (mt) per year to 10-12 million over the last five years. Turkey imports 1.5-2 million mt per month, making it the world largest scrap importer. If prices of rebar can’t keep up with the higher export prices, they may not be able to afford to be in that business to the extent they are now.
Second-quarter trend
We saw this situation starting to appear during Q2’26. As US scrap prices have stayed firm, traditional scrap exporters have directed their material internally since higher freight and modest ferrous prices in Turkey have not kept up. Turkey turned to Europe for deep-sea cargoes but Europe only has so much. When prices rose during the quarter, the Turkish buyers resisted and stayed away from the market until they lack of seaborne demand caused some selling at relatively weaker price tags.
But the mills have to play catchup since the regular flows into Turkey were disrupted for a month. In fact, they are employing the same tactics even now. There will come a time when they won’t be able to get away with these tactics as internal scrap demand increases from the sources where they need to import.
Coming down the pike
Of course, this is all theoretical, and there are ways to mitigate these potential developments, but at what cost? Still, the point is this situation is coming down the road if decarbonization continues to be the goal in Europe and US demand continues to increase.
As far as scrap neutrality in the US market, I don’t see that happening in an absolute sense. This is because the export grade of HMS 80/20 is mainly shunned by US mills for quality reasons. Certainly, HRC steelmakers will not use it since it has lower Fe yield and is loaded with residual alloys. They buy expensive pig iron to dilute their shredded scrap and other #1 obsolescent grades to keep these alloys under control. So, there will always be an export market for these inferior grades. It has to go somewhere.
