South Korea is planning to use scrap steel from cars and abandoned buildings as a strategic material, a government official said Thursday, amid limited supplies and a price spike caused by Russia's special military operation in Ukraine.
Asia's fourth-largest economy is considering several ways, including a stimulus system, to secure enough scrap steel, the official said. According to the research company Fastmarkets, its prices have increased by almost 40% since the end of February.
South Korea, with its developed automotive, shipbuilding and household industries, is a major consumer of steel. In 2020, it purchased 83% of steel scrap on the domestic market, and received 13% of scrap from the Russian Federation.
A supply crisis triggered by the war in Ukraine has taken a toll on demand, says Lee Jae-young, an official at the Department of Metals and Ceramics at the Ministry of Commerce.
“Global demand for raw materials for electric furnaces is growing as they emit less carbon than blast furnaces,” he told Reuters. “Demand for scrap steel, a key raw material for electric furnaces, is growing at the same time. Managing it as a strategic material is part of our response.”
According to the latest figures, the world's sixth largest steelmaker produced 31% of its steel in electric arc furnaces in 2020.
According to the consulting company Wood Mackenzie, by 2050 steel smelted in electric arc furnaces will account for up to 48% of global production, on par with traditional blast furnace steel production from 30% in 2021.
Russian scrap steel prices are rising as Moscow imposed a tariff on its exports this month to stabilize domestic prices.
According to the Korea International Trade Association, Russian scrap metal imports to South Korea more than tripled in April to $24 million.
