The establishment of new steel mills using electric arc furnace technology will also drive a demand for steel scrap. Steel scrap is the primary raw material used in the production of steel by electric arc furnace. The European steel industry, using electric arc furnace technology, accounted for over 40 percent of all steel production, according to the report. Furthermore, over 55 percent of all steel produced in the European Union utilizes ferrous scrap metal as raw material in steel production.
Also capable of increasing the demand for steel scrap is the growth of emerging steel markets. Markets such as Brazil, China and India have growing steel-making industries—creating demand for more raw steel materials to use in production.
Sales improvement in the automotive industry and improved action in the trade of construction are capable of fueling demand for ferrous scrap materials. Steel scrap is valuable in these industries as it is used repeatedly to make steel products without any loss of quality. Through this process, raw material and energy is conserved and landfill space is saved.
While the global recession has triggered a slowdown in steel operations, causing a decline in domestic steel scrap prices, a report by Global Industry Analysts Inc. predicts that the international market of ferrous scrap metal will reach 631.5 million tons in five years. There are a variety of factors conducive to this possible thriving scrap metal market—changes in the automobile and construction industries, demand for raw materials in emerging steel markets and establishment of steel mills that use electric arc furnace technology.