Blog: The circularity of steel

The circularity of steel

The circularity of steel

Eldar Askerov
Head, Strategic Studies, worldsteel
17 December 2018

In September 2018, worldsteel held its first conference on the circular economy. This one-day conference was organised:

  • to broaden members’ understanding of how circular economy thinking may impact the steel industry and its value chain
  • to provide insights on circular economy developments in steel using sectors.

 

Video recordings of the presentations are available via the link on the right of this page. The highlights of the event are summarised below:

How is circular economy regulation changing?

Resource constraints require improved resource productivity, an inevitable transformation from a linear economic model to a circular model with a strong emphasis on eco-design, reuse and remanufacturing. Due to the rising acceptance by society and the business community of circular economy principles and the strengthening of regulations, it is expected that the material intensity of GDP will decline in the future.

Regulators worldwide are increasingly promoting the transition to a circular economy. In Europe, the European Commission has adopted "Closing the loop - An EU action plan for Circular Economy" and is developing strategies to implement circular economy principles at a materials and sector level. Going forward, the European Commission will continue to advance the circular economy concept.  

What are the challenges ahead for the steel industry?

Steel industry value chains are well tailored for certain aspects of circular economy principles, for example, co-products utilisation and recycling. Nevertheless, the broader implementation of circular economy principles will have further impact on the steel industry through the whole value chain. The steel industry will have to set circular economy strategies taking this into account. One of the key tasks of the steel industry will be to build a closed-loop system within its value chains.  

What are the implications of this new business model for the steel industry?

The steel industry will need to implement strategies that incorporate digitisation into all aspects of its business and work with its customers to design products that help to reduce the use of materials while facilitating their reuse and remanufacturing. It also will need to accept that under a circular economy business model, steel products might be offered as a service, implying that steelmakers keep the ownership of the steel products they produce.

Remanufacturing/reuse and its constraints and potential

In the current economic environment, not all products are fit for remanufacturing.  The cost advantage of remanufacturing over the traditional production process is the determining factor. Today, among European countries, Germany has the largest remanufacturing activity. Among steel using sectors, the aviation and automotive industries are the most active in remanufacturing operations. Highlighted by many examples in a number of sectors, steel’s physical characteristics make it one of the best materials to enable remanufacturing.

Construction sector: What are the issues and how will steel fare as a circular material?

A major way to align the construction activity with circular economy principles is to adopt circular designs to facilitate reuse and use of modern materials. In terms of circular design, steel will play an essential role in the construction sector as it provides more options to architects. At the same time, the mindset of major stakeholders needs to change to establish a new way of evaluating construction materials that takes demolition and waste management into account. Another interesting route being explored is the setting up of central databases to keep track of construction materials to facilitate reuse. An excellent example of this application is the platform set up by the Madaster Foundation.

Automotive industry: remanufacturing and impact on steel

Remanufacturing in the automotive industry allows us to retain the value of materials. Remanufacturing practices are already widespread in the automotive industry and are mostly driven by the profitability factor. This could accelerate in a circular economy environment. But for this practice to move forward, product loops should be closed and the logistical processes should be made more efficient. Remanufacturing also has a huge potential for local job creation as it is a labour-intensive process; it is also, on average, 30% less costly compared with the production of new auto parts.

Circular economy and the home appliance industry

The home appliance industry focuses on circular design, helping to reduce inputs, including water and energy. However, at the same time, material circularity of domestic appliances needs to be expanded. In the EU, out of 5 Mt of WEEE (waste electrical and electronic equipment) generated, about 2.3 Mt of steel is recovered.

Is steel the material of choice in the circular economy?

Due to its physical characteristics, steel is well fit for remanufacturing and reuse. Steel has many advantages in a circular economy environment: infinitely recyclable, easy separation and recovery, flexibility in design. 

However, the steel industry needs to work more closely with its consumers to enhance their knowledge on the development of new steel products and the characteristics of these new products.

worldsteel will continue to focus on circular economy developments and the impact this new business model will have on the steel industry. In the meantime, we would be interested to hear how you see the future of the steel industry in this new circular economy business model.

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