In 2024, competition for prime scrap is expected to remain strong due to the growth of new electric arc furnace (EAF) steelmaking capacity in the US. The US is projected to add nearly 16.1 million st/yr of new EAF capacity from the fourth quarter of 2023 through 2025, with the sector accounting for 14.1 million st/yr of the additions and 2.1 million sty/yr being long products. EAFs account for over two-thirds of current US steel production capacity and are poised to take a greater share over the next two years as major expansions come on line.
The surge in scrap-intensive melting capacity will fuel more competition for prime grades after battles for the high-purity scrap grade have been building over the last few years. Steelmakers have honed raw material supply chains over the last few years, with record profits in 2021-2022 driving major acquisitions and industry consolidation, along with an increasing focus on decarbonization of steelmaking.
Growing EAF demand for prime scrap will also be joined by rising interest from basic oxygen furnace (BOF) steelmakers looking to optimize production and reduce greenhouse gas emissions. However, increased scrap demand will not necessarily come hand in hand with higher production capacity, as evidenced by some major steelmakers reporting slightly lower shipment data over the first nine months of the year despite increased melting capacity.
Despite slight variations in estimated total steel production this year, the increasing share of US EAF capacity in 2024 will likely continue to fuel demand for prime grades and push steelmakers to continue exploring cheaper alternatives like low-copper shredded scrap, which has gradually grown in market share over the last few years.
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