Highlights:
- EU draft rules exclude Bangladesh from importing European metal scrap.
- Restrictions could raise steel production costs and market prices.
- Imports supplied 84% of Bangladesh's ferrous scrap in FY25.
- Steelmakers warn losing EU supplies could trigger another industry crisis.
- EU cited environmental compliance concerns over hazardous metal waste processing.
- Bangladesh seeks inclusion before rules take effect on 21 May 2027.
Bangladesh's steel industry may face higher costs and supply problems as the European Union's draft waste shipment rules exclude metal waste from the list of materials the country can import.
The draft list includes Bangladesh as an authorised destination for paper and rubber waste but excludes metal waste. If the exclusion remains in the final list, Bangladesh will lose access to EU-origin ferrous scrap under the new regime from 21 May 2027.
The proposed restriction comes when steelmakers struggle with gas and electricity shortages, weak demand, and rising production costs. The industry relies heavily on imported scrap to produce billets and reinforcing bars, commonly known as rebar. Losing access to a major source could raise raw material costs and steel prices.
The draft is not final, and Bangladesh is pursuing its inclusion through the ongoing review process.
Iftekher Ahmed, an industry analyst and country representative of Jaguar Resource and Capital Pte Ltd, said the EU had historically been a major source of steel scrap for Bangladesh.
"Over 60% of total scrap imports in Bangladesh used to come from EU countries. Though in recent times steel scrap imports from the EU declined due to the Middle East war, in the long run, exclusion from the list would have an impact on scrap prices in Bangladesh," he said.
Sumon Chowdhury, general secretary of the Bangladesh Steel Manufacturers Association, said the industry had been struggling for the past three years.
"If we lose access to scrap from the European market, the industry will face another crisis. Prices of steel products will go higher, further making it difficult to sell," he said.
Heavy dependence on imported scrap
Bangladesh's import dependence leaves steelmakers vulnerable to changes in international availability, prices and shipping costs.
In FY25, the country imported around 5.29 million tonnes of ferrous scrap, compared with nearly 1 million tonnes generated domestically. Imports accounted for about 84% of the total supply of 6.29 million tonnes.
A restriction on EU supplies could force mills to seek alternatives, increasing competition for available cargoes and potentially raising procurement and transportation costs.
The impact on Bangladesh will depend on how much scrap mills currently source from the bloc and whether alternative suppliers can offer sufficient volumes at competitive prices.
Higher costs may push up steel prices
Steelmakers use ferrous scrap to produce billets, which are processed into rebar and other steel products. Higher scrap prices would increase production costs, potentially forcing manufacturers to raise selling prices or accept lower margins.
Tapan Sen Gupta, deputy managing director of leading steelmaker BSRM, said, "The quality of the steel scrap coming from EU countries is better than any other parts of the world. If the EU stops sending steel scrap to Bangladesh, the steel industry will be in trouble."
"The price of steel scrap is likely to rise, forcing the producers to raise the prices of rebar and other steel products," he added.
The extent of any price increase will depend on alternative supplies, shipping costs, exchange-rate movements, existing inventories and manufacturers' ability to pass on additional expenses to buyers.
Environmental compliance at centre
The proposed restrictions stem from the EU's revised waste-shipment framework under Regulation (EU) 2024/1157, which entered into force on 20 May 2024.
Under the framework, non-OECD countries (sovereign states or territories that are not members of the Organisation for Economic Co-operation and Development) can receive only waste streams explicitly authorised for them on the European Commission's list. Countries seeking approval must demonstrate that they can manage the relevant waste in an environmentally sound manner.
Bangladesh submitted its application on 21 February 2025 to remain eligible to receive specified non-hazardous waste from the EU.
The Commission found that Bangladesh met the requirements for paper and rubber waste but did not demonstrate that it had the necessary measures in place to ensure environmentally sound management of metal waste.
Metal waste processing can involve hazardous substances such as lead, mercury, cadmium and hexavalent chromium. Shredding, smelting and refining can also cause pollution without adequate safeguards.
Analyst Iftekher said environmental compliance would be crucial to securing Bangladesh's inclusion.
"If the steelmakers can resolve the issues and the government pushes, there is a chance to include Bangladesh in the list for receiving steel scrap," he said.
"For this, both industry leaders and government officials will have to work together," he added.
Government seeks inclusion
Mahbuba Khatoon Minu, joint secretary (FTA2) at the commerce ministry, told TBS, "We have submitted an application to include Bangladesh in the list. The application is now under review. Once they include us, we will move forward with the consultation."
Replying to a question, Minu said the Commission had raised concerns about the country's environmental compliance.
She added that Bangladesh was not the only country excluded, noting that India, Pakistan and several other countries had also been left out.
"We are trying our best to include Bangladesh in the list," she said.
The European Commission is expected to adopt the first list of authorised destinations by the end of 2026. The new rules are scheduled to apply from 21 May 2027, when non-OECD countries will be allowed to receive only authorised waste streams.