TRADE POLICIES AND THEIR INFLUENCE ON THE STEEL SCRAP PRICE TREND

Trade Policies and Their Influence on the Steel Scrap Price Trend

Trade Policies and Their Influence on the Steel Scrap Price Trend

Blog Article

The steel scrap market is a critical component of the global steel industry, and its price trends are increasingly influenced by international trade policies. In 2025, as global economies continue to navigate environmental regulations, protectionism, and shifting trade alliances, the role of policy in shaping the steel scrap price trend has never been more significant.

This article explores how trade policies—ranging from export restrictions to tariffs and environmental regulations—affect the flow, availability, and cost of steel scrap around the world.

Understanding Steel Scrap as a Global Commodity


Steel scrap, especially grades like HMS 1&2, shredded scrap, and premium low-residual scrap, is globally traded across major economies such as the U.S., EU, China, Turkey, and India. Prices are influenced by factors including:

  • Supply and demand balance

  • Quality of scrap

  • Exchange rates

  • Transportation and logistics

  • Governmental trade policies


Given the transnational nature of scrap trade, any changes in policy can have immediate and wide-reaching impacts on prices.

Key Trade Policies Affecting Steel Scrap in 2025


1. Export Restrictions and Bans


Several countries have imposed restrictions or outright bans on scrap exports to protect domestic industries and ensure local supply.

  • India: In 2024, India introduced stricter controls on ferrous scrap exports to secure feedstock for its growing electric arc furnace (EAF) sector. As of 2025, this has led to higher local scrap availability but disrupted global supply chains.

  • Russia and Ukraine: Due to ongoing geopolitical instability, these nations have intermittently limited scrap exports, affecting European and Asian buyers.

  • Indonesia: The country’s 2025 ban on raw scrap exports has influenced Southeast Asian market dynamics, raising prices in nearby import-reliant economies.


These export restrictions reduce global scrap availability and create upward pressure on international prices, particularly for premium grades.

2. Import Tariffs and Duties


Import tariffs are another policy tool influencing steel scrap trade flows and pricing:

  • United States: Although not directly targeting scrap, Section 232 tariffs on steel imports have created ripple effects across the supply chain, affecting scrap pricing indirectly by altering domestic demand.

  • China: In a reversal from past policy, China now permits some ferrous scrap imports, but imposes strict quality and inspection requirements. These measures impact both the volume and cost of scrap entering the country.


Tariffs and duties distort market pricing by either discouraging imports or increasing the cost of scrap, leading to imbalances in supply and demand.

3. Carbon Border Adjustment Mechanisms (CBAM)


The EU's implementation of CBAM in 2023–2025 has been one of the most significant policy changes in recent years. It taxes imports based on their carbon footprint, favoring low-emission inputs like recycled steel.

Impact on scrap prices:

  • Encourages use of steel scrap over primary steel inputs (like pig iron or iron ore).

  • Creates a premium market for "green" or certified low-carbon scrap.

  • Raises demand and pricing for high-quality, low-residual scrap within the EU.


As more countries consider similar policies, the global demand for sustainable scrap is expected to rise, further influencing pricing trends.

4. Environmental and Quality Regulations


Many countries have introduced strict quality standards for imported scrap to prevent contamination and promote safe recycling:

  • China: Only high-purity, uncontaminated scrap is allowed for import, pushing prices up for qualifying grades.

  • EU and U.S.: Increasing scrutiny on imported scrap quality has raised processing costs and reduced the flow of substandard material.


While these regulations improve overall scrap quality and environmental impact, they also reduce the available supply of usable scrap in the global market—supporting higher prices.

5. Free Trade Agreements and Regional Blocs


Free trade agreements (FTAs) have mixed impacts on steel scrap pricing:

  • The USMCA (United States-Mexico-Canada Agreement) facilitates easier trade of scrap among North American nations, promoting price stability within the region.

  • ASEAN agreements and RCEP in Asia help streamline scrap trade among member states, but disparities in environmental standards still lead to localized pricing variances.


These regional alignments shape where and how scrap moves, influencing local prices based on ease of access and regulatory alignment.

Regional Impacts of Trade Policy on Scrap Pricing


Europe



  • Heavy focus on sustainability and low-carbon materials.

  • CBAM increasing demand for clean scrap.

  • Export bans from Eastern neighbors tightening supply.


Asia



  • Mixed policies across countries: China restricts imports, while Vietnam and Thailand import heavily.

  • Indonesia’s export ban reshapes regional trade flows.


North America



  • Stable internal trade via USMCA.

  • Section 232 tariffs reshaping steel industry behavior.

  • Strong demand for EAF feedstock supporting higher scrap prices.


Middle East and Turkey



  • Turkey remains the world’s largest scrap importer.

  • Sensitive to EU and U.S. trade policies.

  • Political instability in nearby exporting countries causes price swings.


Looking Ahead: The Future of Trade Policy and Scrap Prices


Trade policies are expected to continue playing a defining role in steel scrap pricing through 2025 and beyond. Key developments to watch include:

  • Expansion of CBAM-like policies in other countries (e.g., Canada, Japan).

  • New FTAs or trade realignments due to geopolitical shifts.

  • Greater standardization in scrap quality certification and traceability.

  • Potential for global carbon taxes affecting steel supply chains.


Market participants should stay informed about policy changes in major exporting and importing nations, as even small shifts can have significant ripple effects on pricing and availability.

Conclusion


Trade policies are central to the dynamics of the steel scrap market in 2025. From export bans and tariffs to environmental regulations and carbon border adjustments, governments are shaping not only how scrap moves across borders, but also how much it costs and who gets access to it.

As the global steel industry evolves toward more sustainable and localized production, policy changes will remain a key determinant of scrap price trends. Understanding these complex and interconnected influences is crucial for producers, traders, investors, and policymakers alike.

By closely tracking policy developments, market stakeholders can better anticipate disruptions, leverage opportunities, and make informed decisions in an increasingly regulated and competitive global scrap market.

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