Scrap Metal : EU Steel Regulation: What it means for the metal recycling industry

The European Commission has unveiled a comprehensive legislative proposal aimed at protecting the EU steel industry from the impacts of global overcapacity. The proposed regulation (COM(2025) 726), presented on 7 October 2025, introduces sweeping trade measures that will significantly reshape the European steel market landscape when it comes into force.

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The Commission's proposal centers on limiting tariff-free steel imports to 18.3 million tonnes annually, representing a 47% reduction compared to 2024 levels. The measure would double out-of-quota duties from 25% to 50% and introduce a "Melt and Pour" traceability requirement to prevent circumvention of the measures.

The regulation is designed to replace the EU's current steel safeguard measure, which is set to expire in June 2026. According to the Commission, the EU steel industry faces critical challenges, with production having shrunk by more than 30 million tonnes since 2018, capacity utilization rates reaching a historic low of 67% in 2024, and approximately 30,000 jobs lost since 2018.

The Commission justifies the measures by pointing to unsustainable levels of global overcapacity, currently estimated at 602 million tonnes— equivalent to five times EU demand — and expected to grow to 721 million tonnes by 2027. The proposed tariff quotas are based on the import market share that prevailed in 2013, deemed the last year before global overcapacity significantly impacted the EU market.

While the Commission's proposal does not directly impose export restrictions on metal scrap, it introduces a new monitoring regime that has raised alarm bells within the recycling sector. The Bureau of International Recycling (BIR), representing the global recycling industry, warns that this could lay the groundwork for future trade limitations on secondary raw materials.

Current statistics underscore the significance of scrap metal exports for European recyclers. In 2024, the EU exported 16.7 million tonnes of ferrous scrap to third countries. Earlier data from 2021 showed that ferrous scrap exports reached 19.43 million tonnes, representing approximately 20% of all scrap generated in the EU.

Steel recycling plays a particularly important role in the EU's steel production. For the first half of 2024, the share of recycled steel usage in crude steel production reached 64.9% for the EU-27, significantly higher than major steel-producing nations like China (23.1%), India (24%), Japan (37.5%), and South Korea (37.7%).

The recycling industry argues that any move towards restricting exports of secondary raw materials would risk undermining both the sector's competitiveness and Europe's circular economy objectives. "Recycled materials are vital to decarbonising the metals industry and should be recognised as strategic resources in the circular economy," says Alev Somer, BIR Environment and Trade Director. "Empowering recyclers with free trade – not constraining them – is key to delivering both climate goals and industrial competitiveness."

BIR emphasizes that rather than relying on trade barriers, the EU should focus on stimulating demand for recycled steel through alternative mechanisms. The organization advocates for recycled content targets, green public procurement initiatives, and market-based incentives to boost the uptake of secondary raw materials within the European steel industry.

The Commission's proposal acknowledges steel's strategic importance for the EU's green transition, noting that steel is essential for buildings, infrastructure, railways, automotive, shipbuilding, wind energy, and increasingly for defence and military capabilities. The measure aims to create enabling conditions for the EU steelmaking industry to undertake substantial investments required for effective decarbonization.

However, the recycling industry contends that effective decarbonization of the steel sector requires not just protection of primary steel production, but also robust markets for secondary raw materials. The tension between protecting domestic steel manufacturers and maintaining an efficient circular economy for metal recycling will likely remain a central challenge as the proposed regulation moves through the European Parliament and Council for review and adoption.

Executive Vice-President Stéphane Séjourné emphasised the strategic importance of the measures: "An industrial future for Europe is impossible without a vibrant and resilient steel industry. By protecting our market from unfair global competition, we are building a path for a sovereign decarbonised European steel. This proposal is the first step for our industry to regain competitiveness."

The coming months will reveal whether European policymakers can strike a balance between safeguarding the continent's steel production capacity and maintaining the free flow of secondary raw materials that are essential for both climate goals and industrial competitiveness in a circular economy.