Restricting ferrous scrap exports to non-OECD countries while limiting the addition of compliant ship-recycling capacity in those countries could prove detrimental to the EU economy. The result could be a surplus of ferrous scrap, lower price realisation, insufficient recycling capacity and financial losses for shipowners, writes Hitesh Vyas, Vice President and Green Recycling Coordinator, Wirana.
Europe is pursuing objectives under two separate but closely connected policies. Under the revised EU Waste Shipment Regulation (EU WSR), restrictions on ferrous scrap exports to non-OECD countries will apply from 21 May 2027. Exports will be prohibited unless the destination country has secured authorisation by demonstrating explicitly that it can process the relevant waste streams in an environmentally sound manner.
At the same time, under the EU Ship Recycling Regulation (EU SRR), the inclusion of two ship-recycling facilities from non-OECD countries on the European List remains heavily debated, even though the European Commission has technically cleared them as meeting EU SRR requirements. One of the objectives, among others, is to retain ship-recycled material, including ferrous scrap, within Europe.
It must be recognised that, if both processes proceed, they could increase the surplus of ferrous scrap available in Europe. This could lower scrap-sale returns for recyclers, reduce the value realised by shipowners for end-of-life vessels and leave insufficient recycling capacity when the expected surge in recycling candidates begins.
Recognition based on performance
EU-flagged vessels covered by the Ship Recycling Regulation may only be dismantled at facilities included in the European List. This gives Europe considerable influence over the environmental and safety standards applied during ship recycling. That influence should reward verified improvements and expand responsible capacity, rather than create barriers for facilities that its own authorities have assessed as meeting the prescribed requirements.
If a yard has passed the Commission’s assessment, invested in the necessary infrastructure and demonstrated compliance with European standards, its location outside the OECD should not automatically count against it. Rejecting facilities after they have met the published requirements would weaken confidence in the approval process and discourage further investment.
Facilities in India and elsewhere have invested in impermeable working areas, lifting equipment, hazardous-material controls, worker training and downstream waste management. If these improvements do not provide access to the market, other yards may question the commercial value of making similar investments.
Capacity challenge
The OECD’s Steel Outlook 2026 places EU scrap exports at approximately 22.9 million tonnes, including about 5 million tonnes of steel scrap exported annually to non-OECD countries. Europe will need more scrap as steelmakers increase their use of electric-arc furnaces and pursue lower-carbon production, making the retention of secondary raw materials strategically important.
However, European demand may not grow at the same pace, in the same locations or for the same material grades as the export restrictions take effect. If access to established non-OECD markets contracts faster than domestic demand develops, a temporary surplus could depress scrap prices and reduce the residual values available to shipowners.
Shipping must also prepare for a shortage of approved recycling capacity as more vessels leave the fleet. Recycling volumes have remained low because strong freight markets and disrupted trading routes have extended the commercial lives of older ships. Fleet ageing, special-survey costs and tightening efficiency requirements will eventually bring more recycling candidates to market.
As most global ship recycling takes place in South Asia and Turkey, Europe cannot create sufficient capacity by drawing a regulatory boundary around its own market. Europe should carefully weigh the effects of the processes being pursued under its own policies, particularly when industries and businesses need support to survive difficult conditions. Ongoing developments on EU SRR and EUWSR risk undermining the economic objectives Europe is seeking to achieve.