Industry Insights

The “Scrap Metal Recycling – Global Market Trajectory & Analytics” report has been added to researchandmarkets.com offering.

The publisher brings years of research experience to this 5th edition of the report. The 185-page report presents concise insights into how the pandemic has impacted production and the buy-side for 2020 and 2021. A short-term phased recovery by key geography is also addressed.

Global Scrap Metal Recycling Market to Reach 1 Billion Metric Tons by the Year 2027

Amid the COVID-19 crisis, the global market for Scrap Metal Recycling estimated at 895.8 Million Metric Tons in the year 2020, is projected to reach a revised size of 1 Billion Metric Tons by 2027, growing at a CAGR of 1.9% over the period 2020-2027.

Ferrous, one of the segments analyzed in the report, is projected to grow at a 2% CAGR to reach 896.1 Million Metric Tons by the end of the analysis period. After an early analysis of the business implications of the pandemic and its induced economic crisis, growth in the Non-Ferrous segment is readjusted to a revised 1.2% CAGR for the next 7-year period. This segment currently accounts for a 12.8% share of the global Scrap Metal Recycling market.

The U.S. Accounts for Over 27.1% of Global Market Size in 2020, While China is Forecast to Grow at a 3.7% CAGR for the Period of 2020-2027

The Scrap Metal Recycling market in the U.S. is estimated at 242.5 Million Metric Tons in the year 2020. The country currently accounts for a 27.07% share in the global market. China, the world second-largest economy, is forecast to reach an estimated market size of 197.8 Million Metric Tons in the year 2027 trailing a CAGR of 3.7% through 2027.

Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 0.3% and 1.3% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 0.7% CAGR while Rest of European market (as defined in the study) will reach 197.8 Million Metric Tons by the year 2027.

In light of the recent turmoil in the oil market, the Fastmarkets research team has closely examined the correlations between the price of oil and the prices for ferrous scrap and finished steel products, to discover nuanced relationships and their changes over time.It is common for steel market participants to refer to high correlations between oil prices and the prices for scrap and steel. Among other reasons, this is related to supply chains, because the oil industry is a consumer of steel, the price of oil affects the processing and transportation costs of scrap, and oil is viewed as a reflection of a broader economic reality.

As our first chart below illustrates, at a first glance, the West Texas Intermediate (WTI) oil benchmark price appears to move together with the steel and scrap price series, as represented by the hot-rolled coil (HRC) index, fob mill US, and the steel scrap No1 busheling, consumer buying price, delivered mill Chicago, respectively.

The chart illustrates normalized values for monthly average prices since the beginning of 2000, or z-scores. This shows how many standard deviations a data point is from the mean, allowing us to place all the series on one scale.

Despite following similar trends, oil and steel prices have been changing at noticeably different magnitudes, which is also confirmed by the analysis of first differences.

A closer look at the correlations reveals that scrap is even more strongly correlated with oil than is steel. Over the period from the beginning of 2000 into the first half of 2020, correlations between HRC and busheling prices in the US versus the oil benchmark amounted to 76% and 84% respectively. Our analysis shows that there is no time lag, and the correlations are strongest in real time.

As our second chart highlights, however, the relationships between the price series have not been consistent over time. There was a significant drop in the period after the 2008 financial crisis, and an annual breakdown reveals even more inconsistencies.

There are a few significant reasons why the relationships between the oil and steel prices broke down from 2009 onward.

First, steel prices have been affected by a flow of lower-priced imports. And later, as a response to that, there was a rise in trade protection measures in the US, which somewhat shielded steel prices by reducing competition from imports.

Second, oil, being a more liquid market than steel, probably reacted more strongly to the financial crisis.

As a result, correlations for oil versus steel and scrap in the US fell from 75% and 86% during the five-year period 2005-09, to 42% and 28% in the following five years.

As the chart also shows, the situation has recovered since then, but has yet to return to the scenario seen in the early 2000s.

With regard to scrap, post-crisis years have revealed an increased dependency in the US on ferrous scrap sales to Turkey, introducing another important factor that affects US domestic scrap prices.

The share taken by Turkey of total US ferrous scrap exports has risen from 16% in 2009 to consistently above 20% ever since, peaking as high as 31% in 2015.