The steel sector is vital for Europe’s economy: in 2023, it generated a total €191 billion turnover, employing more than 300,000 people. However, its production is one of the most energy-intensive, with a heavy reliance on import of scrap. A rapid shift to circular production could be the cure-all. Improving domestic steel scrap quality and use can significantly cut emissions from transportation, bring down the use of virgin material, and reduce reliance on imported materials.
The scrap paradox
The EU steel sector has a trade deficit for finished goods, particularly due to imports of high-value products, such as hot-rolled coil or stainless steel. At the same time, it is a net exporter of steel scrap, its main raw material. The EU is in fact the world's largest exporter of ferrous scrap, shipping out about 20% of what it collects. Despite the exportation, research shows that there is currently no shortage of steel scrap in the EU.
However, Europe could greatly benefit from improved management of its domestic resources, hence reducing external dependencies.
Quality is key
Not all scrap is equal. Currently, a significant portion of exported scrap is rather low-quality and mainly used in construction and building. High-quality scrap can be leveraged for sought-after applications like automotive. Three key actions can dramatically improve the quality of scrap:
- better sorting and treatment: on the supply side, recyclers would need to invest in more modern processes to produce secondary material of higher quality;
- clearer classification systems: EU classification is often not sufficiently accurate to define a clear range of scrap quality levels;
- better use of scrap: in the case of applications in high demand, like flat steels for cars or wind turbines, higher quality scrap should be prioritised.
By doing so, the EU could unlock an additional 20-40 million tonnes of high-quality scrap annually. Though it is poised to grow, this corresponds to a remarkable 52% of the EU’s scrap consumption in 2024.
Enhancing scrap use in the EU would also mark a shift from blast furnaces, coal-dependent and highly carbon-intensive and polluting, to electric arc furnaces (EAF), which generate roughly three times less emissions per tonne of steel compared to blast furnaces.
New global and domestic pressures
Recent US steel tariffs and China's goal to increase its scrap-based steel production could reshape global scrap markets. JRC analysis shows that if China meets its target, Chinese industry would need an extra 45 million tonnes of scrap—nearly half the EU's current available scrap after exports. While the immediate risk of a scrap shortage in the EU is low, these external factors highlight the need for strategic action.
Key policy measures may include establishing early-warning systems for supply bottlenecks, creating a quality-based scrap classification to improve market transparency, and using green public procurement to stimulate demand for high-quality recycled steel.
As for the old continent, a transition to a more circular steel economy may reduce jobs in primary steelmaking – even though it could create new roles in return, for instance in recycling and advanced manufacturing.
Related links
Analysis of the EU Steel supply chain: current trends and circularity opportunities
Environmental and socio/economic impacts of the Circular Economy transition in the EU steel sector
Details
- Publication date
- 14 October 2025
- Author
- Joint Research Centre
- JRC portfolios 2025-27
