SCRAP-BASED ELECTRIC ARC FURNACE MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

Scrap-based Electric Arc Furnace Market Size and Trends

Global Scrap-based Electric Arc Furnace Market is estimated to be valued at USD 809.1 Mn in 2024 and is expected to reach USD 1,791.2 Mn by 2031, growing at a compound annual growth rate (CAGR) of 12.1% from 2024 to 2031.

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The market has been witnessing steady growth over the past few years and the growth is attributed to factors like rising demand for recycled steel and emphasis on sustainability across industries. Electric arc furnaces are immensely more eco-friendly than traditional blast furnaces used for primary steelmaking. A large proportion of total carbon emissions from steel production come from the iron making stage where coking coal is converted to coke and fed into blast furnaces. This energy intensive process releases significant amounts of greenhouse gases. In contrast, electric arc furnaces do not require coking of coal and source most of their feedstock from recycling scrap steel which has a fraction of the carbon impact as producing crude steel from iron ore.

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Insights, By Production Type, Steel Production Leads a Remarkable Market Share

By Production Type, steel production is expected to contribute 48.5% market share owing to constant demand from construction and manufacturing industries. Steel plants require large and sustainable supply of scrap to fuel steelmaking in their electric arc furnaces. The construction industry alone accounts for over half of global steel demand as vital infrastructure projects, commercial buildings, housing and other construction activities require tremendous amounts of rebar, structural steel and other steel products. 

Insights, By Scrap Type, Dependable Supply Chains, Obsolete Scrap Contributes the Highest Market Share

By Scrap Type, obsolete scrap is expected to contribute the highest share of 42.3% market share owing to its dependable supply chains. Obsolete scrap comprises scrap vehicles, scrap appliances and other discarded objects, provides electric arc furnace operators a bulk supply of quality ferrous scrap. Well-established recycling infrastructure and reverse logistics networks have been developed over the years to efficiently collect, process and transport obsolete scrap from all corners. 

Insights, By End-user Industry, Construction Contributes the Highest Market Share

By End-user Industry, construction is expected to contribute the highest share of 44.3% market share in 2024 owing to immense infrastructure development activities. Both developed and developing economies are aggressively scaling up construction of roads, rail lines, airports, seaports, power plants, residential and commercial spaces to accelerate socio-economic growth. Mega-projects under China's Belt and Road Initiative and India's Smart Cities Mission have ramped up scrap demand from the construction industry. 

Regional Insights

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Dominating Region: North America

North America is expected to account for a leading share of 44.1% market share in 2024. This growth is attributed to the strong government support for recycling initiatives and investment in green technologies. This region has some of the most advanced scrap recycling facilities and a large manufacturing base dependent on EAF technologies. Industry leaders from this region are shaping global standards in circular manufacturing practices.

Fastest-Growing Region: Asia Pacific

The Asia Pacific region is poised to exhibit the fastest growth of 37.2% market share in 2024. The momentum is driven by rapid industrialization, rising demand from construction and automotive sectors, and supportive trade policies promoting cleantech adoption. Countries in Southeast Asia in particular are investing heavily in scrap-based infrastructure to transition to more sustainable steel production methods.

Scrap-based Electric Arc Furnace Market Outlook for Key Countries

Focus on R&D Fuels Growth in the U.S.

The U.S. scrap-based electric arc furnace market benefits from extensive R&D in materials science and the presence of leading furnace makers. Regional alliances have boosted sourcing of quality scrap and efficient recycling. As the consumption of steel has increased post-pandemic, the supply of scrap metal has struggled to keep pace with the growing needs of electric arc furnace producers. With more steel needed to support the construction and manufacturing industries, electric arc furnaces that rely on scrap as their primary feedstock have had to contend with higher scrap prices and limited availability.

Increased Capacity and Stringent Environmental Norms

China's market continues to lead globally through robust capacity expansion and focus on advanced scrap-based steelmaking. Stringent environmental norms are driving technological upgrades across the supply chain. As China focuses on reducing carbon emissions and improving environmental sustainability, strict limits have been placed on primary steel production that relies on coal. This has led many steel producers to shift production capacity towards scrap-based electric arc furnaces that produce steel from recycled scrap metal using electric energy rather than coal.

Scrap-usage Policies to Emphasize Infrastructural Development

The Indian market's growth is propelled by infrastructure development and increasing use of scrap in secondary steel plants. Collaborations with global experts are facilitating skills and capacity building. Electric arc furnaces rely heavily on ferrous scrap as their primary raw material input. However, India's rapidly growing steel production has led to increased competition for scrap supplies. As more integrated steel plants have come online, they have absorbed much of the domestic scrap production. This has pushed scrap prices up for electric arc furnace operators.

Improving Market Standards to Empower Self-reliant Measures in Japan

Japan's market possesses a highly skilled workforce and adopts cutting-edge furnace designs to maximize productivity. Robust quality standards ensure reliable supply to its manufacturing industries. As scrap availability continues adjusting to Japan's evolving industrial landscape, electric arc furnace producers will need to carefully consider feedstock sourcing strategies and potential plant upgrades. Monitoring broader economic and demographic trends will also help identify developing steel end-use sectors poised for future growth.

Market Concentration and Competitive Landscape

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Top Strategies Followed by Scrap-based Electric Arc Furnace Market Players

Established Players: R&D Investment- Leading scrap-based electric arc furnace companies intensely focus on research and development to produce innovative products. Companies like ARPES make large investments in R&D each year to develop more efficient furnaces with advanced features like automated scrap charging and alloy mixing systems. This allows them to maintain an edge over competitors and meet the specialized needs of customers.

Mid-Level Players: Cost-Effective Solutions- Medium-sized scrap-based electric arc furnace producers emphasize delivering cost-competitive options. Firms like MEFOS concentrate on standardized designs that streamline production while reducing expenses. They pass the savings onto customers to appeal to budget-conscious buyers. MEFOS also partners with raw material suppliers to secure competitive pricing that keeps their furnaces affordable.

Small-Scale Players: Niche Specialization- Emerging scrap-based electric arc furnace companies focus on specialized market segments left untapped by larger firms. For instance, Newtech Creations produces miniature furnaces tailored for jewelry manufacturers and research labs. Their compact designs address the unique needs of these niche industries.

Emerging Startups in the Scrap-based Electric Arc Furnace Market

Innovative Technologies: Startups are developing advanced technologies to disrupt the industry. Effigy Labs has created smart sensors that monitor furnace operations in real-time. Integrated with AI and IoT, the sensors diagnose issues, predict maintenance needs, and optimize processes to increase efficiency. This innovative technology could transform furnace manufacturing.

Sustainable Solutions: Eco-Friendly Products- Green Forge illustrates how sustainability is an avenue for disruption. They developed the world's first electric arc furnace made completely from recycled scrap metal and using specialized AI to minimize energy usage. Their eco-friendly approach helps reduce industry carbon emissions and promotes a circular economy model. Partnerships with material suppliers allow them to scale production and contribution

Scrap-based Electric Arc Furnace Industry News

• In October 2024, Tata Steel announced the closure of its blast furnaces at Port Talbot, Wales, as part of a £1.25 billion investment to install electric arc furnaces. This move aims to reduce carbon emissions but is expected to result in 2,500 job losses. The new EAFs are projected to be operational by late 2027.
• In November 2024, Meranti Green Steel committed USD two billion to construct an electric arc furnace in Thailand. This facility is designed to produce low-carbon steel for export to Europe, aligning with the EU's upcoming Carbon Border Adjustment Mechanism set to take effect in 2026.
• In November 2024, ArcelorMittal decided to delay its green steelmaking investments in Europe, citing policy uncertainties and the slow progress of the EU's carbon border tax plans. Despite this, the company is proceeding with the construction of an electric arc furnace in Gijón, Spain.

Key Takeaways from Analyst

• The scrap-based electric arc furnace market is poised to grow on account of rising steel recycling rates globally. The increasing focus on sustainability and reduction of carbon emissions will drive more companies to adopt the electric arc furnace route for steelmaking using scrap as the primary raw material input. North America and Europe currently dominate the market owing to stringent environmental regulations and established infrastructure for scrap collection in these regions. However, the Asia Pacific region is expected to witness the fastest growth in adoption of scrap-based electric arc furnaces in the coming years led by China, India, and other developing countries.
• While rising ferrous scrap prices remain a major challenge, development of advanced furnace technologies that improve productivity and yield even with lower-grade scrap grades will help alleviate this constraint. Favorable government policies promoting a circular economy and recycling will further encourage electric arc furnace owners to boost scrap utilization. Obtaining a regular supply of quality scrap of required specifications needs addressing. The ability of electric arc furnace operators to quickly adapt production based on fluctuations in scrap availability will determine their resilience. High capital costs involved in setting up electric arc furnaces pose a barrier, although the availability of incentives in some regions mitigates this to an extent.

Market Report Scope

Market Dynamics

Market Driver - Cost Effectiveness Compared to Basic Oxygen Furnace

As the manufacturing industry continues to progress towards more environmentally friendly practices, electric arc furnaces provide a cost-effective alternative to traditional blast furnaces for steel production. With rising energy costs and stricter emissions standards, minimizing operating expenses while complying with regulations is a priority for steel companies. Electric arc furnaces offer compelling benefits on both fronts. Electric arc furnaces require much less initial capital investment compared to basic oxygen furnaces. They do not need the same supporting infrastructure such as coke ovens, sinter plants, and blast furnaces that blast furnaces rely on. This reduces upfront costs significantly. Operating costs are also lower due to utilizing scrap steel as the primary raw material rather than iron ore.

Market Challenge - Volatility in Scrap Prices Challenges Market Growth

The scrap-based electric arc furnace market has been facing significant challenges due to the volatile pricing of scrap metal in the recent past. Scrap constitutes a major raw material for electric arc furnace steel producers, accounting for over 60-70% of the total raw material basket. However, global scrap prices have witnessed considerable fluctuations over the last few years mainly due to uncertainties in the global economic environment and changing supply-demand dynamics. As scrap is traded in the international markets, its pricing gets impacted by macroeconomic factors across different regions. Volatility in scrap prices increases the input cost volatility for electric arc furnace producers, making accurate project costing and pricing for clients quite challenging. It also impacts the margins and profitability of electric arc furnace manufacturers.

Market Opportunity- Investment in Technological Advancements Creates Novel Opportunities

Scrap-based electric arc furnace market presents new opportunities for growth with heavy investments in technological advancements and automation. Electric arc furnace producers are increasingly focusing on incorporating Industry 4.0 principles and integrating their melting and manufacturing facilities with advanced digital technologies. This includes leveraging solutions like artificial intelligence, internet of things, and big data analytics to optimize plant operations, improve yield and productivity, and reduce carbon footprint of operations. Advanced sensor-based technologies help track asset performance in real time while predictive maintenance tools minimize breakdowns.

Market Segmentation

• Production Type Insights (Revenue, USD Mn, 2019 - 2031)
• • Steel Production
  • Non-ferrous Metal Recycling
  • Alloy Production
  • Pig Iron Production
•  Scrap Type Insights (Revenue, USD Mn, 2019 - 2031)
• • Obsolete Scrap
  • Home Scrap
  • New Scrap
  • Industrial Scrap
•  End-user Industry Insights (Revenue, USD Mn, 2019 - 2031)
• • Construction
  • Automotive
  • Energy & Power
  • Machinery & Equipment
  • Consumer Goods
• Regional Insights (Revenue, USD Mn, 2019 - 2031)
• • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
  • Danieli & C. Officine Meccaniche S.p.A.
  • Siemens AG
  • Tenova S.p.A.
  • SMS Group GmbH
  • Primetals Technologies Limited
  • Steel Dynamics, Inc.
  • ArcelorMittal S.A.
  • Gerdau S.A.
  • Nucor Corporation
  • POSCO​