Economic Impact of Recycled Steel – Key Economic Benefits
Recycling building materials like steel is critical in today’s world to help preserve the earth’s natural resources.
Recycled steel is a much more eco-friendly material than virgin steel. It requires much less energy to produce, reducing carbon emissions during production, and also conserves natural resources like iron ore, limestone, and coal. Besides its enhanced sustainability and reduced energy requirement, what is the economic impact of recycled steel?
Recycling steel fosters a circular economy by continuing the sustainable production of steel and cycling used steel back into production. Aside from its green building benefits, recycled steel is cost-effective and creates employment opportunities in the recycling plants. Moreover, it promotes international trade as countries import and export recycled steel.
In this article, I’ll discuss the economic impact of recycled steel in some depth. So, if you’ve been wondering, “What are the economic benefits of metal recycling?” keep reading for answers.
Job Creation in the Steel Recycling Industry
Job creation is crucial for the economy as it impacts a country’s Gross Domestic Product (GDP).
When more people in a country are employed, they have more money to spend on food, clothing, and even luxury goods, creating a ripple effect in the economy.
Steel recycling companies need employees to ensure their operations run smoothly. These companies contribute positively to the GDPs of their respective countries by employing more people.
In addition, recycled steel creates job opportunities in related industries, like transportation and scrap collection.
More people are employed to collect and sort steel scrap for recycling, and truck drivers are employed to transport the scrap steel to recycling firms and onward to market.
According to IBIS World, the recycling industry has created 24,507 jobs in the U.S. in 2023, accounting for a 0.5% employment growth rate.
Further evidence of the health of the recycling sector can be seen in the number of employees in the recycling industry, which has been increasing in the U.S. since 2014.
The number of Americans employed in the recycling industry grew by 2.3% over the past five years, indicating a positive trend in terms of its contribution to GDP.
The graph below demonstrates the employment trend in the recycling industry in the U.S.
Cost Savings Through Steel Recycling
Besides quality, cost is one of the factors buyers consider when looking for construction materials, and recycled steel is more cost-effective than its primary counterpart.
Recycling steel eliminates the many processes associated with virgin steel production. Processes that make virgin steel production costly include:
- Opencast mining to extract iron ore from the earth’s crust.
- Coking coal to produce coke for energy.
- Using limestone to reduce iron ore to form pig iron.
Recycling eliminates all these processes since it only requires steel scrap. This scrap is melted and cast into new products.
Based on the above points, the cost of producing recycled steel is obviously lower than that of its primary counterpart. These savings are passed on to the consumers, making recycled steel a more affordable option for construction.
In terms of numbers, a Statista study reveals that recycled steel costs about $415 per tonne (2,200 lb) in the U.S. On the other hand, Focus Economics states that virgin steel costs $920 per tonne (2,200 lb) in the U.S.
Therefore, using recycled steel will save you approximately $505 per ton (2,000 lb).
Let’s dive into a quick example to help you understand how much you can save on a construction project using recycled steel.
On average, construction projects use 4 kg of steel per square foot (0.09-square-meter).
Let’s assume you’re building a 2,500-square-foot (230-square-meter) home.
For such a home, you’ll need (4kg × 2,500) = 10,000 kg (10 tonnes) of recycled steel.
Savings per ton of recycled steel = $505.
Savings for the entire project = (505 × 10) = $5,050. That’s not to be sniffed at!
Economic Value of Steel Scrap
Steel scrap is the primary material used to make recycled steel. The scrap comes from construction and demolition sites and industrial and household waste.
So, how does recycling impact the economy?
Steel scrap has economic value to steel production companies, citizens, and countries in the following ways:
- Reduction in production cost: Steel manufacturing companies can lower their production costs by using steel scrap instead of virgin raw materials to produce steel. Steel scrap eliminates costly processes like mining. It also conserves energy, reducing the overall production cost. In turn, companies can make more profit by lowering the production cost.
- Job creation: Recycling steel scrap benefits a country’s citizens by creating more job opportunities. From sourcing, sorting, and transporting this scrap to the processing firm, the production of recycled steel creates more jobs.
- A boost in the economy: Countries benefit from steel scrap recycling in terms of the revenue this generates. Money changes hands as more people are employed to process the scrap into recycled steel. This spending gets money moving round the local economy and is great for prosperity.
- Sustainable investment: Recycled steel is a sustainable building material made from steel scrap and reduces the need for resource extraction and the accompanying greenhouse gas emissions and pollution that come with primary steel production. Therefore, the industry attracts eco-conscious customers and investors by promoting sustainable practices. To be successful in today’s world, companies must demonstrate the sustainability of their operations, and they can do this through the production and use of recycled steel.
- Price stability: The availability of steel scrap in a country helps to stabilize steel prices. When the cost of iron ore and coking coal rises, manufacturers can counter these high costs by incorporating more steel scrap in production.
Steel Recycling and Circular Economy
Promoting a circular economy is crucial for environmental conservation. A circular economy uses resources sustainably rather than throwing them away after a single use.
Steel promotes a circular economy due to its high recyclability — 100% of steel is recyclable, with 1,085 million tons of steel scrap recycled annually.
A circular economy promotes the following practices:
- Reduce: Lowering energy and resource consumption in production.
- Reuse: Using the material again for its original purpose or a different role without changing its physical form significantly.
- Remanufacture: Restoring quality used steel products to “as new” condition.
- Recycling: Melting steel products at the end of their lifecycle to make new steel.
Steel recycling promotes a circular economy in the following ways:
Reduce
Steel recycling reduces the amount of energy and natural resources used in primary steel production.
Recycling steel achieves this reduction in the following ways:
- Reduced consumption of raw materials: Virgin steel production consumes more iron ore, limestone, and coal. However, recycling a ton (2,000 lb) of steel conserves 0.8 tons (1,600 lb) of coal, 1.4 tons (2,800 lb) of iron ore, and 0.3 tons (600 lb) of limestone.
- Reduction in carbon dioxide emissions: Manufacturing a ton (2,000 lb) of primary steel emits about 1.85 tons (3,700 lb) of carbon dioxide. On the other hand, recycling a ton (2,000 lb) of steel prevents the emission of about 1.67 tons (3,340 lb) of CO2.
- Reduced energy consumption: Recycled steel conserves between 60 and 74% of the energy used to manufacture primary steel.
- Reduction in transportation impact: Transporting raw materials for virgin steel production causes large carbon dioxide emissions, and recycling steel eliminates the these emissions because it doesn’t use virgin raw materials.
The chart below shows energy reduction achievements in the steel industry since 1960:
Reuse
Reusing steel promotes a circular economy by increasing product lifecycle and minimizing waste. Steel can be reused without changing its physical structure if it’s still in good condition.
An excellent example is structural steel components like beams and columns. These components are often reused in other buildings with minor modifications.
Steel is also reused in other applications like cargo containers, railway tracks, short-span bridges, and cable-stayed bridges.
Reusing steel is beneficial in the following ways:
- Reduction in construction cost: Reusing structural steel components eliminates the need for new products, reducing construction costs.
- Less material demand: Using existing materials reduces demand for new raw materials, reducing resource depletion.
- Reduced construction time: Reusing steel, especially on the same site or one close by, shortens construction times significantly because you need to source and process fewer construction materials.
- Eco-friendliness: Reusing steel eliminates the need for mining natural resources, which avoids habitat and biodiversity loss thereby preserving nature.
Recycling
Steel recycling involves melting steel products at the end of their lifecycle to make new steel.
The main difference between recycling and reusing is that while the former melts the end-of-life steel product to make new steel, the latter largely retains the product’s original form.
The following are attributes of steel recycling and their contributions to a circular economy:
- Steel can be recycled many times without losing properties: It conserves more raw materials like coal, limestone, and iron ore for future generations.
- Easy magnetic separation and recovery: This makes steel scrap sorting for recycling easy and cost-effective.
- High-quality end-products: Recycled steel products have the same quality as those made from primary steel.
- Lesser environmental impact: Steel recycling conserves the energy required for primary steel production and reduces pollution and emissions from mining activities.
International Trade in Recycled Steel
The international trade in recycled steel is a booming industry that has experienced tremendous growth over the past few years.
Recycled steel accounts for approximately 40 percent of the world’s steel production, and this figure is expected to increase as more people become aware of the sustainability and economic benefits of recycled steel.
According to Nortrade International, the global volume of steel scrap and other scrap metals has increased tremendously since 1990 to over 100 million tons in 2020. This has played a significant role in promoting international trade among countries.
Countries with advanced steel recycling technologies, such as the United States, China, Japan, and Germany, export huge amounts of recycled steel products, growing their economies in the process.
In 2021, scrap iron (part of steel and iron) was the 77th most traded product globally, with a revenue of $56.6 billion. This was an increase from 2021’s revenue of $33.1 billion.
The European Union was the leading exporter of steel scrap in 2021, accounting for about 19.5 million tonnes in exports.
The graph below illustrates the leading steel scrap exporters in 2021:
Final Thoughts On The Economic Impact of Recycled Steel
The economic impact of recycled steel is significant. It creates employment opportunities, boosts GDP, facilitates international trade, and conserves natural resources.
Importantly, it brings all these economic benefits while also reducing the environmental impact from manufacturing primary steel.
As global trade in recycled steel continues to grow, we are likely to see more of these benefits in the future.
