Scrap-fed EAF revolution is UK steel sector’s last chance for success: comment

Published by:Lee Allen<>
1 May 2025 @ 20:05 UTC
Britain no longer requires virgin steelmaking, and a complete shift toward electric-arc furnaces (EAFs) fed with ferrous scrap is the last hope for the country’s wilting steel industry.

The future of the UK’s steel industry has been thrust back into the spotlight over the past couple of weeks amid thedramatic government takeoverof British Steel’s sprawling factory in Scunthorpe, northeastern England.
The move attracted almost unanimous support across the UK political spectrum but it is nothing more than sticking plaster on a terminally ill patient.
Britain’s steel producing sector is in a sorry state. The UK has the sixth-largest economy by gross domestic product (GDP) but ranks in a paltry 35th place for steelmaking, with output shrinking to just 4 million tonnes in 2024, down by 29%.
At the same time, the UK imported 6.45 million tonnes of iron and steel products over the year, including 716,374 tonnes of semi-finished steel, 2.16 million tonnes of flat-rolled steel and almost 500,000 tonnes of rebar and rod, according to UK customs data cited by Global Trade Tracker.
British Steel might live to fight on as a producer of virgin steel from basic oxygen furnaces (BOFs) for a time, but its years doing so are surely numbered.
Jingye, the Chinese owner of British Steel, said in late March that it was losing £700,000 ($927,000) per day. That came after India’s Tata Steel claimed that it was losing around £1 million per day in operating its Port Talbot BOF complex in Wales before closing down the blast furnaces (BFs) last year.
Both plants had been importing raw materials such as iron ore and coke from as far afield as Mauritania and Australia, to keep the BFs alight. British Steel is still doing this, albeit now the UK Department for Business and Trade is footing the bill out of its already-stretched budget.
Scrap the clear solution But there is a solution for UK steelmakers that not only would make the transport of raw materials less expensive, but would also decarbonize the nation’s steelmaking decisively: melting more ferrous scrap in EAFs.
The UK generates 10 million-11 million tonnes per year of ferrous scrap, of which 2.6 million tpy is used in domestic steelmaking and the rest is exported, according to a report published on April 30 by the Institution of Structural Engineers, the British Constructional Steelwork Association, and Climate Group.
UK scrap exports were a huge 7.64 million tonnes in 2024, up from 7.22 million tonnes in 2023, according to UK customs statistics.
Tata Steel is already investing in EAFs to melt scrap in Port Talbot from 2027, but British Steel has so far resisted that path.
Owner Jingye not only shunned a government offer of £500 million to help such a transition in Scunthorpe, it was reported to be asking for a lot more, according to media reports.
A representative from industry body UK Steel said that the group would expect a managed process on whether a government-controlled British Steel would opt for EAF technology in future, rather than repeat the sudden and disruptive situation which took place at Tata Steel.
Following the closure of Tata’s BOFs in Wales, the local UK consumer market is taking in less scrap than ever, with UK export dock buyers gaining yet more influence in the domestic market, according to UK scrap sources.
UK dock buyers have been slashing their prices over the past month, in line with a dramatic slump in pricing of the bellwether Turkish market, where most UK scrap is exported.
Fastmarkets’ latest weekly price assessment for steel scrap, HMS 1&2 (80:20 mix), export, fob main port UK was $294-296 per tonne on April 25, down month on month from $358-359 per tonne.
Supply of scrap Decarbonizing steelmaking across the globe cannot solely rely on the consumption of ferrous scrap because the supply of such material is limited, according to the UK report.
Global scrap consumption in the past few years has been around 650 million tpy, approximately one-third of the level of overall global steel production, the report said. World scrap availability is currently only sufficient to meet around one-third of global steel demand, a figure expected to rise to around 50% by the middle of the century.
Because of the limited supply and already-high utilization of available ferrous scrap around the world, it means that any increase in the amount of scrap being used in one locality is more likely to result in a decrease in its use elsewhere, rather than a decrease in overall global [greenhouse gas] emissions, the report said.
Scrap availability is also constrained by export restrictions in the secondary raw materials market, with as many as 48 nations having already restricted their exports of ferrous scrap, according to Ukrainian information provider GMK Center. And 55% of African nations and 24% of Asia have such restrictions in place, according to the research company.
UK scrap supply is also much lower than the country has capacity to process, a major UK processor said last month, with sluggish economic performance dragging down supply while high electricity costs make both processing and steelmaking highly expensive.
But while a greater use of steel scrap in the UK could draw away some supply from major importers in countries such as Turkey, India and Pakistan, this shift could still help to reduce global greenhouse gas emissions.
This is because the UK has a lower-carbon electricity grid to power the melting of its scrap than many of the countries that currently recycle the UK’s material, and because emissions will be avoided by not transporting UK materials over long distances to destinations overseas, the report said.
Influx of EAF-produced imports The fight for the future of the UK steel industry also comes at a time of higher consciousness surrounding carbon emissions, and a desire for greener steelmaking.
Capturing this wave, Fastmarkets has launched green steel premiums for both flat and long steel in Europe over recent years.
There is now greater demand for lower-emission steel from UK construction customers, with some firms preferring to import EAF steel from abroad rather than continuing to use BOF steel made in the UK, a spokesperson for industry body UK Steel told Fastmarkets on April 14.
British Steel commercial director Ben Cunliffe cited this week’s report when arguing against the case for importing foreign EAF-produced steel sections into the UK market.
The UK market demand for EAF structural sections has increased dramatically over the past two years, with more and more client project specifications mandating reduced limits on embodied carbon within new building project specifications, which is forcing contractors to import structural sections from overseas, he said on Wednesday.
The analysis highlights that ferrous scrap is a constrained resource, with availability only sufficient to meet around one-third of total global steel demand, and it will continue to be constrained for many decades to come, he said.
Logically, therefore, he added, specifying recycled EAF steel at project level has no effect on global GHG emissions due to this constrained global scrap availability, and is merely a displacement of BOF/EAF from one route to the other.
Does the UK need primary steelmaking? Although Cunliffe’s argument is convenient for his BOF-operating employer, it fails to recognize the clear inefficiency of a British plant importing primary raw materials from far afield and making steel products which do not require virgin steel.
British Steel makes rail, sections, special profiles and wire rod. All of these could be produced by a capable EAF operator, from domestic UK ferrous scrap.
Flat automotive-grade steel has long been preferred from BOF operators due to the high qualities needed, but technological advances and work by companies such as US steelmaker Nucor have demonstrated that EAFs can now produce even these grades.
It then begs the question of whether the UK needs primary steelmaking capacity anyway. My view is that no, it does not. Trade unions will prefer the virgin route because it requires much greater manpower than EAFs, but that aside, there are no strategic advantages for the UK in this route.
Even when looking at the prospect for national security purposes, BOFs come up short. Both Sheffield Forgemasters and Liberty Steel, which operate EAFs in the UK, supply the UK with military steel.
In 2016, there was uproar when French steelmaker Industial was chosen over British rivals to supply steel for the hulls of its new batch of nuclear submarines.
Industeel’s factories produce high-quality steel plates from – you might guess – EAFs.
A British EAF revolution could shore up the UK’s security of supply for pivotal industries such as defense and wind energy.
It would tap into the abundant local supply of ferrous scrap and help stem the tide of steel imports into the country while operating less costly and less labour-intensive steel plants than the BOFs that are traditionally run in Britain – from SSI’s shuttered plant in Redcar, to Tata in Port Talbot, to British Steel in Scunthorpe.
The final question is: Will the UK government now take the final chance to save its steel industry?