As the world recovers from the pandemic, the resumption of economic activity has been somewhat disjointed. This has seen a number of shortages, including everything from HGV drivers to natural gas, while the logistics sector deals with a lack of containers.

In the midst of this is a confusing picture regarding scrap metal, with some costs rising and others falling, as detailed this week by Recycling International.

A particular contrast lies between the costs faced by exporters in Europe and the US trying to send scrap abroad and the price of obsolete scrap in Europe, which has not only been falling, but is doing so much faster than new scrap, driving an ever-growing gap between the two.

In the case of exporters, the key problem is the 11-year high shipping rate, exacerbated by disruption to the supply chain and labour shortages. While the article noted that the rate was three times as high in the 2008 economic crisis, there are some specific problems faced by metal exporters now.

Former lead economist for sustainability charity Wrap Peter Sainsbury told Recycling International the key issue is that scrap is increasingly being transported using dry bulk shipping, but demand for this form of transport is currently very high among producers of commodities like coal, grain and iron ore.

He added: “A record low ship order book is also likely to mean scrap metal shippers will continue to face commercially challenging transport conditions.”

While exporting is a problem for many, the lower cost of obsolete scrap is clearly good news for those paying for it, if not the seller. In the EU, steel mills have been reporting that the cost of E1 scrap has dropped by €40-50 per tonne since August.

Suppliers have said this drop is unsustainable, although there have been suggestions prices may still fall further this winter amid a glut of cheap supply.

A key question going forward for the industry is whether the issues it faces are frictional ones caused by the disruption and dislocation of the last couple of years, or is set to face more structural and enduring challenges.

The latter scenario may be the case if warnings sounded at the Metals Recycling event, staged at the end of last month, prove true. As Letsrecycle reports, a key concern expressed was that the determination of the EU to implement green legislation could have negative impacts on trade.

Chief executive of the British Metals Recycling Association (BMRA) James Kelly told the event: “There is a danger of this killing the industry, a danger of being regulated out of business.”

It is not just the EU at which the finger is being pointed. Mr Kelly said the UK government might respond to recent lobbying by the steel industry and “mandate certain restrictions on quality that can be exported in the hope that that would help the UK industry.” However, he argued, this would be “folly” and the BMRA has been doing plenty of lobbying of its own on this point.

Mr Kelly argued a better move would be for the steel industry to switch from electric furnaces that can use scrap for almost all their feedstock, whereas the current generation of furnaces can only use up to 30 per cent scrap.