In an era of geopolitical instability, soaring energy prices, a climate emergency, and trade uncertainty from across the Atlantic, securing access to strategic materials has become a top priority for Europe’s industrial economies. The EU’s Steel and Metals Action Plan, announced on 19 March, is the latest step in this broader strategy, aimed at enhancing the competitiveness of the continent’s steel and aluminium industries.

Steel and aluminium are vital industrial inputs and among the most recycled materials worldwide. Recycled metals already contribute significantly to European production, reducing CO2 emissions, generating high-quality resources, and supporting thousands of local green jobs. The EU Steel and Metals Action Plan correctly recognises the essential role of recycled metals in achieving climate neutrality, circularity, and industrial resilience. However, decarbonising steel and metals production requires more than mere recognition. It demands concrete commitments, guarantees for the uptake of recycled materials, bold measures to encourage circularity, and a delicate balancing act to ensure that, in the name of decarbonisation, the EU does not undermine its key ally in circularity - the European recycling industry. 

A delicate balancing act

The action plan, heavily influenced by European steel and aluminium producers – already hit hard by the prospect of US tariffs - rests on the premise that the EU should keep its ‘scrap’ at home, to address the alleged ‘scrap leakage’, a concern heavily publicised by Europe’s manufacturers. To achieve this, the plan floats the idea of potential trade restrictions, such as export duties and fees, which would practically add red tape to the global trade of recycled materials and force recyclers to halt any export businesses.

Reconfiguring global supply chains and restricting trade flows of recycled metals is a risky course to take. Policymakers should consider the long-term implications of limiting access to international markets for recyclers.  Export restrictions can disrupt supply chains and hinder the circular economy. They risk creating imbalances, where surplus materials, like EU recycled steel – fail to find a market, leading to stockpiling, increased landfill use, and the waste of vital resources.

The EU has already taken measures to regulate waste shipments and the global trade of recycled materials, notably through the revised Waste Shipment Regulation. These measures aim to ensure that exported materials are processed under environmentally sound conditions - a goal fully supported by EU recyclers, who in recent months have been working diligently to help these countries meet the rules’ stringent conditions.

However, layering additional export restrictions on top of this framework could create unnecessary burdens. Focus should instead be on boosting domestic demand for recycled content through targeted incentives, binding recycled content targets in strategic value chains, and improving access to affordable, clean energy for metal producers. High energy prices have been crippling Europe’s industries, with operational costs becoming unsustainable, particularly for EU recyclers, who watch their market outlets vanish daily while continuing to generate resources to power Europe’s green transition. 

Instead of undermining global trade and the competitiveness of Europe’s recycling industry, we need a deeper understanding of the business realities EU recyclers are facing.

From supply to demand: Understanding the market dynamics

In recent years, domestic demand for recycled steel in Europe has declined. Between 2014 and 2023, the use of recycled steel within the EU dropped from 87.5 million tonnes to 75.2 million tonnes, while exports increased from 12.3 to 18.9 million tonnes. This trend reflects broader shifts in Europe’s industrial landscape, including reduced production capacity, persistently high energy costs, and a limited uptake of recycled materials.

The numbers reveal that the issue is not ‘scrap leakage’, but rather a significant lack of domestic demand. In this context, international trade has served as a critical safety valve, allowing Europe’s metals recyclers to remain viable by exporting surplus material. Therefore, instead of framing  “scrap leakage,” as a problem in the EU Steel and Metals Action Plan, policymakers should view it as a natural consequence of global market dynamics and a response to underutilised capacity within the EU – capacity that can be improved with the right policy measures that genuinely support EU recyclers.

These recyclers are not standing in the way of Europe’s decarbonisation and competitiveness- they are enabling it. High-quality recycled metals cut emissions, lower industry’s carbon footprint, and support Europe’s material autonomy, reducing reliance on lower-quality, higher-impact imports from other countries.

Europe must lead globally by aligning industrial and environmental strategies, showing how trade, circularity, and competitiveness can reinforce each other. The EU Steel and Metals Action Plan can drive this, but only if it focuses on long-term, structural solutions, not short-term fixes.