The Impact of the Imbalances in Scrap Metal Formation and Use on the Economy: A Cross-Country Analysis

Abstract

The study focuses on assessing the impact of varying scrap metal formation and use ratios on the economies of countries around the world. Data sources include databases from international organizations (World Steel Association, Bureau of International Recycling), national industry associations, and others. To achieve this goal, the first step is to determine the type of imbalance in a country based on a quantitative assessment of the ratio of scrap metal formation and use. Next, the most significant impacts of the imbalance on the economy are described for groups of countries with similar scrap metal formation and use ratios, based on their development characteristics. Using the Russian Federation as an example, a quantitative assessment of the imbalance’s impact on the country’s economy is conducted. It is found that the absolute majority of countries are characterized by an imbalance in scrap metal formation. This currently limits the development of a closed-loop economy worldwide and highlights the issue of recycling unclaimed metal waste and ferrous scrap. The different impacts of this imbalance on the economies of countries are described based on the different dynamics of steel production (growth, stabilization, or decline) and other factors. A group of countries (e.g., the Republic of Korea, Mexico, Taiwan, and Belarus) has been identified for which the impact of the imbalance on the economy could change dramatically in the future due to a slight misalignment between the rates of scrap metal formation and steel production. Based on an assessment of the lost economic benefits from not utilizing some of the scrap metal generated in Russia, a rationale is provided for the need for more active use of scrap metal in industry, which would reduce the long-term risks for national metallurgical companies from the introduction of CBAM.