In a world moving towards sustainability and decarbonisation, metal recycling has become a key part of the circular economy. However, this strategic sector does not operate in a vacuum: it is deeply influenced by political decisions, economic changes and geopolitical tensions. One of the most decisive factors in recent years has been the increasing use of tariffs as a trade policy tool, especially in the context of the tariff war initiated by the Trump administration in the US
The most recent edition of the BIR Iron Division’s World Mirror, presented at the Valencia Convention, analyses how these tariffs have altered traditional trade flows in ferrous scrap. But the report goes beyond tariffs and offers a powerful picture: if tariffs are the fire that ignites market volatility, demand is the oxygen that can either fuel or stifle it.
Impact of tariffs on the scrap trade
Recent tariff actions, especially by the US administration, have disrupted traditional trade flows of recycled steel. These measures have led to disruptions in established trade routes and increased the costs associated with trading in ferrous scrap. For example, exports to Mexico have declined significantly due to new tariffs, affecting demand in that country.
Demand as a market driver
Despite trade barriers, demand for ferrous scrap remains a crucial driver of the market. In regions such as Asia, the growing need for recycled steel has had a significant impact on prices and international trade dynamics.
- Turkey: The world’s largest importer of ferrous scrap, Turkey reflects the pulse of the global market. Although demand remains stable, the volatility of the lira, inflation and the slowdown in domestic construction complicate the operation of its steelworks.
- India: With a strong push for urbanization and investment in infrastructure, India projects great long-term potential. However, recent tariff changes and currency instability have made imports more expensive, while domestic recycling still fails to meet growing demand.
- EU: Europe faces high energy costs, low industrial performance in key economies such as Germany and more protectionist measures. The proposed Carbon Boundary Adjustment Mechanism (CBAM) adds uncertainty for exporters and importers.
- Southeast Asia: Countries such as Vietnam and Indonesia are increasing their presence in the world market for recycled steel. However, they face challenges such as logistical bottlenecks and inconsistent regulations.
- North America: In the US domestic demand remains strong thanks to spending on infrastructure and green policies. However, tariffs have affected exports, and the sector is closely watching the political direction that trade policy may take after the upcoming elections.
- UK: The UK experiences mixed signals in its post-Brexit market. With limited domestic production, the emphasis is on export. Still, shipping costs, waste regulations and uncertainty about EU agreements complicate the picture. Green steel projects could provide a more stable demand base in the future.
Future perspectives
The BIR report highlights the importance of monitoring both trade policies and demand trends to understand and anticipate movements in the scrap market. As global economies adapt to new realities, the interaction between tariffs and demand will remain a central issue in the metal recycling industry.
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