Executive Summary
The European Commission's forthcoming Circular Economy Act (CEA) represents one of the most consequential legislative initiatives of the current mandate. Properly designed, it has the potential to simultaneously advance three of the European Union's paramount strategic objectives: industrial competitiveness, resilience, and climate neutrality. For the steel industry in Germany, the CEA is therefore not a supplementary environmental measure. It is a central instrument of European industrial policy.
Steel is among the most circular materials in the world. It can be recycled indefinitely without any degradation of its material properties. End-of-life collection rates already exceed 90 %1, and more than 30 % of German steel production is today based on the secondary steel production route that relies on ferrous scrap input2. The environmental and resource efficiency dividends are substantial: recycling one tonne of ferrous scrap into new carbon steel avoids the consumption of 1.4 tonnes of iron ore, 120 kg of limestone, and 740 kg of coking coal, leading to reduced dependency on raw material imports3 . Furthermore, using scrap instead of raw materials reduces energy consumption and emissions. Last but not least, the steel production delivers valuable by-products to other industries e.g. cement. These are not marginal gains, but transformative contributions to EU climate and resilience policy. However, also worldwide increasing scrap demand, fragmented regulatory framework conditions across Member States, insufficient scrap retention within the EU, unresolved barriers to the use of industrial byproducts, and inadequate investment signals collectively prevent the sector from realising the circular transition at the pace and scale required. Therefore, the German steel association calls on the European Commission to address under the CEA:
Secure Europe's domestic scrap base through a qualitative and quantitative scrap monitoring and develop new scrap sources – including from ship and energy infrastructure recycling – and treatment operations.
Harmonise the regulation for by-products and end-of-waste (EoW) across the EU Single Market and enable the full use of steel industry by-products as contributors to industrial symbiosis.
Avoid mandatory recycled content requirements that disregard structural constraints of steel production routes, scrap availability, and product quality standards. Instead reward low-carbon and circular performance. Stimulate demand for secondary and low-carbon steel products through targeted public procurement.
Improve the investment conditions for advanced sorting infrastructure and circular production capacity.
The CEA must function as a horizontal enabling framework: fully coherent with the Clean Industrial Deal, the Steel and Metals Action Plan, the Industrial Accelerator Act, the Critical Raw Materials Act, and the Ecodesign for Sustainable Products Regulation that position circularity as a driver of European industrial competitiveness, rather than solely as a compliance and environmental obligation.
1 Eurofer: Annual report 2023
2 Facts and Figures about the Steel Industry in Germany | Wirtschaftsvereinigung Stahl - Stahlindustrie Deutschland
3 German Steel Association: Facts and Figures 2025
Introduction
The pressure to strengthen and decarbonise EU industry while reducing strategic dependencies on third countries and reversing declining competitiveness has converted into a political imperative: the EU and its industry must become more resilient. The Circular Economy Act (CEA) will arrive precisely at this moment and plays an important role for the steel sector. Steel is the material backbone of every major industrial value chain on the continent, from renewable energy infrastructure and automotive to construction and defence. How the EU designs the rules governing its use of secondary material will determine not just the degree of longevity, reuse, remanufacturing, recycling (rates), respectively, and decarbonisation pathways, but the competitiveness and resilience of European industry as a whole. In this context, it is essential to always understand terms such as secondary material, secondary raw material, etc. in such a way that they include both recycled materials and by-products from industrial processes.
The transition to low-emission steelmaking via Electric Arc Furnace technology (EAF) significantly increases the industry's demand for high-quality ferrous scrap. European scrap demand is projected to grow while domestic scrap supply will remain broadly, creating a structural demand tension within the EU4 . Without active policy measures to monitor, secure, and develop the domestic scrap base, this growing demand will not be met, and the economic and environmental case for low-emission steelmaking in Europe might be further undermined.
Steel is a basic material with applications across countless sectors. The entire value chain from collection and sorting to shredding and processing is itself steel-intensive, relying on plants and machinery manufactured from steel. Steel thus acts as a key enabler of the circular economy.
Approximately 84 percent5 of all steel ever produced worldwide remains in use or in circulation, owing to its durability and recyclability. All steel scrap collected in Germany and across Europe is channelled into recycling processes. Every tonne of steel produced generates by-products such as slag, process gases or dusts that are integral to the production process itself and represent established secondary raw materials for other industries. In the cement sector, slag from steel production replaces clinker and reduces production-related CO₂ emissions. In road construction or energy supply, steel byproducts substitute virgin primary inputs at scale. Other by-products are e.g. used in the chemical industry or as pigment and thereby avoid the exploration of natural resources. This is industrial symbiosis in its most developed form. However, some materials currently cannot circulate freely within the EU Single Market. Divergent national legal frameworks, such as inconsistent transposition and application of waste law, mean that a by-product or EoW material accepted as a secondary raw material in one Member State may be classified and treated as waste in another, triggering entirely different regulatory requirements, transport conditions, and compliance costs. This fragmentation leads to legal uncertainty and must be resolved through harmonised, EU4
wide rules that reflect the actual environmental and technical performance of these materials.
The Circular Economy Act must therefore be designed with a clear understanding of these sectoral dynamics. It should neither distort functioning material cycles through undifferentiated mandatory targets, nor impose disproportionate regulatory burdens that deter the very investments the transition requires. Instead, it must provide stable, coherent, and enabling framework conditions at EU level that allow the steel industry to lead Europe's circular economy transformation.
Policy Priorities
Securing Europe's Scrap Base
The steel sector's transition to low-emission steelmaking is fundamentally reshaping demand for ferrous scrap. EU scrap demand is projected to grow from approximately 79 million tonnes in 2022 to over 95 million tonnes by 2030, while domestic supply will remain broadly constant at around 92 million tonnes. Against this backdrop, the current scale of EU scrap exports is untenable. Between 16 and 19 million tonnes leave the EU annually6, predominantly destined for third countries with lower environmental and social standards – which simultaneously export steel products back into the EU at prices that undercut domestic producers.
Addressing this requires both, better retention of existing scrap flows and the systematic development of new domestic sources. Two streams are of particular strategic relevance: EU-owned maritime vessels represent a significant and largely untapped source of high-quality structural steel scrap, the recovery of which is currently undermined by the persistent use of Flags of Convenience diverting dismantling away from EU-approved facilities. Equally, the growing volumes of end-of-life energy infrastructure such as power plants, offshore wind installations, solar mounting structures, and steel towers, represent a future scrap stream of considerable strategic importance that must be captured within the EU. Ensuring that this infrastructure is decommissioned and processed within the EU, under high environmental standards, will yield significant scrap volumes and prevent the export of these materials to regions with lower recycling quality. Our proposals are:
Establish an EU Monitoring System based on a combination of enhanced TARIC 10digit codes, trade volumes, publicly available price structures for imports as well as exports, enabling a granular monitoring of post-consumer scrap grades and alloyed scrap flows containing critical and strategic raw materials. Only a robust and validated data basis on relevant material flows and qualities creates the foundation for targeted policy frameworks aligned with the needs of domestic value creation.
Prepare possible policy instruments in advance, so that targeted trade measures can be deployed swiftly once the monitoring system identifies critical supply risks. This includes developing a toolkit that ensures WTO-compatible measures that
6 Joint Research Centre (JRC): Analysis of the EU steel supply chain - Characterisation & use of EU steel scrap in relation to global trade dimensions (2025).
safeguard domestic scrap availability and support Europe's industrial transformation.
Recognise ferrous scrap as a Strategic Secondary Raw Material under the CEA and CRMA, analogous to the Critical Raw Materials list, unlocking dedicated monitoring, trade policy tools, and investment support mechanisms in case of further scrap shortage.
Introduce smart instruments to actively increase the volume of scrap available within Europe, including incentivising EU-based ship dismantling and ensuring the recovery and domestic processing of steel-intensive energy infrastructure such as offshore wind installations.
A
Functioning Single Market for secondary raw materials, EoW-materials and byproducts
The EU Single Market for secondary raw materials (understood throughout this paper as encompassing both recycled materials and by-products from industrial processes) remains deeply fragmented. End-of-Waste criteria are interpreted differently across Member States, and by-product status is granted inconsistently with member states and also national authorities defaulting to the most restrictive standard available, effectively blocking rather than enabling intra-EU material circulation. This affects especially the cross-border use of steel by-products such as slag, too, which substitutes clinker in cement production reducing carbon intensity, yet cannot circulate freely across Member State borders. It also hinders recycling or direct use of EoW-materials. Identical materials face fundamentally different regulatory treatment depending on where they are traded, leading to distorting competition, suppressing industrial symbiosis, and impeding the efficient allocation of secondary resources at precisely the moment when cross-sectoral circular value creation should be scaling up. A genuinely harmonised Single Market for secondary raw materials is not a technical detail, it is the foundational prerequisite for a functioning European circular economy. This requires:
The overarching objective shall be to establish a well-functioning circular society, thus leaving behind the historic approach from the waste perspective and its harmless disposal. Any approach that permits or sustains divergent interpretations across Member States, their constituent federal entities, and the relevant authorities would hinder a successful development and would be counter-productive for circular society and economy, for resource efficiency and resilience.
Introduce harmonised, EU-wide criteria for End-of-Waste and by-product status, grounded in the environmental and technical performance of materials in their specific application, rather than in the most restrictive national standard among Member States, combined with effective mutual recognition in cross-border national and European trade.
Ensure that REACH and chemical restrictions do not inadvertently obstruct circularity and the use of secondary raw materials. Application-, substance-, and product-specific evaluations must be conducted to resolve conflicts between product, chemicals, and waste law, maintaining a consistent risk-based approach throughout.
Recognise industrial by-products, EoW material and waste explicitly in the CEA as a structural pillar of European circular economy practice, warranting dedicated policy measures alongside secondary materials.
Avoid mandatory recycled content requirements
Mandatory recycled content requirements, if applied without regard to the structural realities of steel production, risk distorting well-functioning material cycles rather than strengthening them. Scrap utilisation in steel is governed by metallurgical constraints, product quality specifications, and the technical requirements of different production routes. Generic quota mechanisms do not increase total scrap availability, but they rather redirect existing flows between sectors, generating diversion effects without systemic circularity gains. Where mandatory thresholds outpace domestic supply of fitfor-purpose scrap grades, producers face either quality compromises or competitive disadvantage. The CEA should instead reward circular and low-carbon performance through outcome-oriented instruments. Thus:
Avoid mandatory recycled content requirements under the CEA that do not account for the metallurgical and supply-side constraints of steel production routes and product segments, as these risk intra-sectoral diversion without net circularity gains.
Refrain from introducing generic scrap quota systems in functioning material cycles; deploy instead incentive-based measures that enable optimal scrap use according to process and product requirements.
Promote outcome-oriented instruments, including product carbon footprint methodologies and green public procurement criteria over prescriptive input mandates.
Subject any future recycled content provisions to rigorous feasibility assessments covering scrap availability by grade, production route compatibility, and potential market distortion effects prior to adoption.
Stimulating Demand for Secondary and Low-Emission Steel
Creating demand for recycled and low-emission steel is as much a strategic imperative as it is an environmental one. Lead markets for low-emission steel Made in EU built through public procurement signal to investors that the transition to secondary steelmaking is commercially viable. At approximately 14% of EU GDP7, public procurement is a powerful instrument to create demand for recycled and low-emission steel Made in EU. Achieving this requires to:
Establish mandatory, sector-specific Public Procurement criteria for recycled and low-emission steel with ambition levels increasing progressively over time in line with technological progress. To this end, it makes sense to further develop the requirements of Annex IV No. 15 of the Waste Framework Directive as an independent article of the Directive. Use labels and standards that are available within the market.
Combine sustainability criteria with Made in EU requirements in public tenders for steel-intensive products to create lead markets for European-made steel and support the investment case for domestic decarbonisation.
Accept existing or develop internationally harmonised standards for the quality and traceability of recycled materials, supported by suitable and practice-oriented Digital Product Passports (DPP), to ensure market integrity, prevent fraud, and establish a level playing field with third-country suppliers.
7 OECD: Promoting the Uptake of Strategic Public Procurement in European Union funded projects (2024-2026)
Investment Conditions for Collection and Sorting Infrastructure and Circular Capacity
The quality and availability of ferrous scrap depends not only on how much is collected and transported, but on how well it is processed. Today, substantial volumes of recoverable material leave the EU as low-grade, un- or less processed scrap, exported before advanced sorting and shredding could obtain its full material value. This represents a dual loss: European steelmakers are deprived of high-quality steel scrap precisely when demand is rising due to the transformation to low emission steel production technologies, while the embedded value of critical alloying elements such as nickel, chromium, and manganese is transferred to third countries. Targeted investment in advanced sorting infrastructure would directly address this gap through improving scrap quality, increasing domestic supply of high-grade secondary materials, and strengthening Europe's resilience. We propose to
Establish dedicated, combinable EU and Member State funding instruments for investments in advanced scrap sorting, processing and fast analysis technology to address the scaling gap between pilot projects and full industrial deployment.
Streamline permitting procedures for both, circular infrastructure and low emission steel production investments, with harmonised timelines, digital administrative tools, and EU-wide implementation guidance, reducing barriers to investment in recycling capacity.
Your contacts
Gerhard Endemann | Head of Environment and Sustainability Policy
+49 1713749891 | gerhard.endemann@wvstahl.de
Yannik Sparrer | Head of Industry Policy and Circular Economy
+49 170 6693450 | yannik.sparrer@wvstahl.de
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