Ferrous Scrap Recycling Market Size, Share & Trends Analysis Report By Sector (Construction, Automotive, Consumer Goods, Industrial Goods), By Region, And Segment Forecasts, 2020 - 2027

Report Overview

The global ferrous scrap recycling market size was valued at USD 97.6 million in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 1.7% from 2020 to 2027. The market growth is attributed to the rising need for scrap in several industries, such as construction, automotive, and metals manufacturing, owing to its environmental and economic benefits, which helps in reducing pollution and consumption of energy and raw material. The market growth is further propelled by increasing scrap generation, which is attributed to more consumers visiting scrap yards with their products consisting of ferrous materials that have reached their end-of-life (EOL) and technological advancements that have helped in increasing the recovery rate of scrap from products. Moreover, rising environmental concerns overutilization of non-renewable resources, carbon dioxide emissions, and high energy usage in primary production of metals have augmented the growth of secondary production.

The U.S. plays a significant role in the recycling market as steel is the most recycled material of the country. Recycling carries vital significance in the U.S. owing to its economic benefits as the industry creates jobs and helps in having a positive impact on the environment. In 2017, the scrap recycling industry supported 534,506 paying jobs in the U.S. and generated a revenue of USD 117 billion.

Ferrous constitutes a large share in overall scrap generation owing to the consumption of steel in various end-use industries and the recovery rate from end-products. For example, in the U.S., the ferrous scrap recovery rate from cars is 100%, followed by structural steel, appliances, reinforcement steel, and steel cans with 98%, 90%, 70%, and 66.8% respectively. Growth of the end-use industries that are the key consumers of the product, such as automotive and construction, is a major driving factor for the global ferrous scrap recycling market.

The construction industry is the major end-user of the ferrous scrap and as a result, it has the largest share in terms of contributing towards its generation as well. The growing emphasis on sustainable development boosted the usage of the product in infrastructural developments. Recycled ferrous scrap is used in producing various products, such as girder, nuts, bolts, heavy crushing machinery, car cylinder blocks, parts of machine tools, brake drums, gear wheels, shafts, gears, parts of the engine, kitchen draining boards, pipes, aircraft parts, metal ropes, and garden tools.

Increasing preference for crude steel production through the electric arc furnace (EAF) is further augmenting product demand, as steel scrap accounts for a share of around 10-12% in basic oxygen converter and over 70% in the EAF process. The crude steel production through the EAF process was 520.44 million tons in 2018 compared to 472.69 million tons in 2017. This is a positive sign for market growth.

Growth of the market was affected in 2020 owing to the Covid-19 pandemic, which impacted the transportation of supplies and forced the factories and manufacturing plants to shut. Although crude steel production has been covered under the Essential Commodities Act,  the on-going continuation of the production is doubtful as there is no demand for steel in the current scenario. The low demand has significantly affected the scrap prices to drop.

Sector Insights

Ferrous scrap collection has been segmented based on four sectors: construction, automotive, consumer goods, and industrial goods. Construction led the market and accounted for more than 46.0% share of the global revenue in 2019. Construction has been the key end-user of steel, and hence the industry makes the maximum contribution to metal scrap collection. Steel is widely used in the construction industry, considering its benefits such as durability, versatility, strength, cost-effectiveness, and sustainability.

A large amount of scrap is generated during the demolition of buildings. Although steel accounts for an extremely meager share in the overall mass of the building, but mostly all steel parts are recovered, such as good quality beams, which can be sent for direct reuse. The remaining parts that cannot be reused directly are sent for recycling. On average, a 2,000 square feet steel framed house can generate around a cubic yard of recyclable materials.

Automotive is the second-largest sector of the market as vehicles consist of various metals and at their EOL, they help by returning their metal and other recyclable materials within them. For example, an average passenger car consists of 65% of steel and iron. Over millions of vehicles are discarded every year and are used for generating scrap. For instance, Europe is a key hub for car recycling where over 6 million vehicles are discarded annually generating around 9 million tons scrap. The recycling circle is appreciable as the scrap collected is again used in similar applications. For instance, car bodies are made using around 25% of recycled steel.

Regional Insights

Europe accounted for the largest volume share of 42.5% in 2019. The European steel industry has been an efficient operator of steel recycling systems for more than 150 years. In Europe, steel in cars is recycled at a rate of more than 95% and in packaging at over 74%. The phenomenal property of this alloy of being recycled over and over makes steel scrap a major raw material in crude steel production. In terms of export, European Union-28 (EU-28) is the largest ferrous scrap exporter in the world. According to the 10^th edition of World Steel Recycling released by the Bureau of International Recycling, EU-28 exported 21.44 million tons of steel scrap in 2018.

In terms of revenue, North America was the second-largest regional market accounting for a revenue share of 31.0% in 2019. The share is mainly attributed to the significance of recycling in the U.S., followed by Canada. The recycling industry is of vital importance in Canada. According to the Canadian Association of Recycling Industries, the industry employs over 34,000 workers and indirectly creates 85,000 jobs. According to the Bureau of International Recycling, Canada was the 5^th largest ferrous scrap exporter in the world in 2018.

Asia Pacific is anticipated to witness the fastest growth, in terms of revenue, over the forecast period. Although countries like China, Japan, Australia, and Singapore are the major shareholders in the market, there is immense potential for the recycling industry to propel in developing countries, like India. India generates a large amount of scrap but still is a major importer owing to the unorganized nature of the industry in the country.

India is in the process of making policies in favor of the recycling industry of the country, which will encourage in developing collection and dismantling centers, shredders, and aggregators. The policy shall aim towards reducing scrap imports and by 2030, the country may come out self-sufficient. In December 2018, India’s 1^st automobile shredder was established by Mahindra Group and it aims to begin shredding operations from vehicles and consumer durables at five more locations. Automotive players such as Tata Motors and Hyundai have also shown interest in establishing such shredding units.

Key Companies & Market Share Insights

The market is highly competitive and unorganized owing to the presence of major manufacturers and small-scale players. The metal recycling industry holds immense potential for growth in the coming years. However, many recyclers witnessed a loss in 2019 owing to a decline in scrap prices because of factors, such as China’s import restrictions and unseasonably mild weather. The price decline and low market growth rate are expected to continue in 2020 as well because of the coronavirus. In February 2020, Sims Metal Management Inc., one of the leading recyclers in the world, based in Australia, reported a net loss for the first half of its fiscal year 2020 due to lower metal prices and a decline in sales volume of ferrous scrap. Some of the prominent players in the ferrous scrap recycling market include:

• Sims Metal Management Inc.

• OmniSource Corp.

• Ward Recycling

• American Iron & Metal Co. Inc.

• SA Recycling

• Schuy Recycling

• Innovative Metal Recycling

• TSR Recycling GmbH & Co. KG

Ferrous Scrap Recycling Market Report Scope

Segments Covered in the Report

This report forecasts revenue and volume growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global ferrous scrap recycling market report on the basis of sector and region:

• Sector Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

  • Construction

  • Automotive

  • Consumer Goods

  • Industrial Goods

• Regional Outlook (Volume, Kilotons; Revenue, USD Million, 2016 - 2027)

  • North America

    • The U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • France

    • The U.K.

  • Asia Pacific

    • China

    • Japan

    • Australia

  • Central & South America

  • Middle East & Africa