Just two graphs tell you everything you need to know about steel, scrap and greenhouse gas emissions. This is the first.
Along the bottom, left to right, you have time. It starts in the year 1900 at the left and continues through to the year 2100 at the right. 2024 is about two thirds of the way along. And up and down, on the vertical axis, you have the quantity of metallic iron, in thousands of tonnes. The scale goes up to 3 billion tonnes.
The dark blue line shows how much crude steel the world produces each year. From 1900 to 2023 it’s historical data1, starting at around 28 million tonnes at the beginning of the 20th century, and reaching 1.9 billion tonnes last year. Looking into the future it’s obviously a projection. I’ve shown it reaching a maximum level of production of 2.5 billion tonnes in the year 2100. That’s probably on the conservative side. It’s feasible, but far from certain. We can come back to that.
Then we have two more lines. The orange one shows how much scrap2 (to be precise, the total of home3, manufacturing and end-of-life scrap4) is used to make that crude steel. This line is not real data. It’s been calculated as a function of the blue line, crude steel production. What it shows is that each tonne of crude steel produced generates some proportion of home scrap and some proportion of manufacturing scrap and then, when a product reaches the end of its life in use after a delay of 30 or 40 years , some of the steel in it is recovered and recycled as end-of-life scrap. In this case I’ve assumed that 26% of crude steel production is quickly returned as pre-consumer scrap, and that after 35 years 85% of end-of-life steel is recovered and recyled as post-consumer scrap. Those numbers are up for grabs, and we can come back to them too.
And finally, there’s the yellow line. That’s the difference between the blue line and the orange line, with an adjustment for yield loss. I’ve applied a 5% yield loss, for the sake of argument. The yellow line shows you how much primary iron needs to be extracted from iron ore to make all the crude steel the world produces in a given year.
Congratulations! You now know as much as the world’s greatest experts on steel supply and demand.
How much steel will the world need? When will steel production peak? That’s the blue line. What drives demand? What kinds of products? In which countries? Can we reduce demand by substitution, or material efficiency? We can discuss all of that, and see how the blue line changes depending on our assumptions.
How much scrap is there? How will scrap supply change in the future? Is there enough scrap to make all the crude steel we are going to produce? That’s the orange line. And we can discuss what affects scrap supply, and what might change that. Are the data right? Are the projections right? Could we recover more end-of-life scrap? How much? We can debate all that too.
And then there’s the yellow line. The gap between crude steel production and scrap supply – the gap that has to be bridged. And there are only four ways to bridge it: by reducing the production of crude steel – the blue line; by increasing the supply of scrap – the orange line; by reducing yield loss; or by mining iron ore and extracting iron from it. Those are the only choices.
To be clear: the future is not certain. We cannot be sure about steel demand over the next thirty years. The potential availability of end-of-life scrap is contested: recovery rates could improve, although we don’t know by how much. Yield loss could be reduced. And we can investigate how these kinds of variations affect the precise trajectory of all three lines on the graph. Rest assured, we will be doing that in future posts!
Does any of this matter? Well, the futures of iron ore mining, blast furnace construction (or deconstruction), direct reduction iron (DRI) production and direct electrolysis steelmaking all depend on how much primary iron the world is going to need.
That’s a couple of trillion dollars of investment at stake. Fortunes are there to be made or lost, depending on how those lines pan out. That’s of major interest to a few billionaires, plenty of bankers and investors, and those of us who are lucky enough to have pensions to worry about. It’s also of extreme interest to millions of workers of course. So yes, it’s safe to say that those variations matter.
But even more than that, it’s not much of an exaggeration to say that the future of the planet just happens to hang on how those lines work out too.
This first graph doesn’t say anything about greenhouse gases and climate change.
You know the numbers by now. Steel production today emits around 3.7 billion tonnes of CO2 – 9% of the world’s total5 – and a further 300 to 900 millions tonnes CO2 equivalent of methane. 4 billion+ tonnes of greenhouse gas emissions annually, that has to come down to near zero by 2050 or 2060.
And that’s the subject of the second graph you need to know about, in my next post…
Footnotes