The EU is proposing to cut Egypt off from its steel scrap

The European Commission proposed excluding Egypt from importing EU-origin ferrous and non-ferrous metal scrap when the bloc’s revamped Waste Shipment Regulation takes full effect on 21 May 2027, according to a draft regulation, threatening a core feedstock for Egypt’s steel mills. The draft lists non-OECD countries authorized to receive non-hazardous waste from the EU. Egypt, along with India, Pakistan, Morocco, Bangladesh, and Saudi Arabia, was excluded for ferrous and non-ferrous metal scrap after the Commission found they failed to demonstrate environmentally sound waste management.

Why it matters: Egypt imported 1.86 mn tons of EU-origin steel scrap in 2025 and another 2.12 mn tons in the first half of 2026 — up 59.7% y-o-y, per Eurostat data compiled by Fastmarkets. Egypt is the third-largest importer of EU scrap metal globally, according to Politico, and roughly 50% of Egypt’s total ferrous scrap supply currently comes from EU countries, MENA geopolitical risk consultant and researcher Amandeep Kaur Ahuja tells EnterpriseAM.

Egypt is already the world’s second-largest billet importer — scrap is the other core feedstock for its electric-arc-furnace mills. Losing European supply would force mills toward alternative scrap sources or greater use of direct reduced iron (DRI), both of which carry cost and logistics implications. The government has been building domestic scrap capacity, including the Damietta ship breaking yard, which targets 1.5 mn tons annually over five years (enough for 66% of local demand as of 2024). It also inked a separate MoU with Maersk in February 2025 for a green recycling facility at the same port. Both projects, however, remain in planning with no disclosed timelines.

Scramble or adapt?

Egypt is not as EU-dependent as the headline figures suggest, since scrap trades globally off a benchmark rather than a Europe-specific market, Executive Director of the Metallurgical Industries Chamber Mohamed Hanafi tells us. Prices are set against the Rotterdam benchmark that global scrap trades are pegged to, which is why Egypt already sources scrap beyond Europe, including from the US, China, and Australia. “European factories cover their own needs from local scrap first and only export the surplus. The scrap export ban for Europe is an advantage and a strategy in their favor, not a flaw,” he says. Freight from Europe currently runs USD 20-25 a ton, versus USD 35-40 a ton from distant markets like China or the US — a roughly USD 15-a-ton gap (around EGP 700) that runs straight into production costs.

“Egypt would have to scramble to find replacement volume,” Ahuja argues, given that roughly half of total scrap supply comes from the EU. Substitution is possible in principle but not painless in practice, she says. Both sources land on the same conclusion: diversifying away from EU scrap is doable, but costly.

Egypt has options, Ahuja says. Some steelmakers are already setting up outside the country — Ezz Steel’s move into Algeria is one example, where “one of the factors could have been closer [alignment] with [the Carbon Border Adjustment Mechanism (CBAM)], so this could be a way for them to circumvent the ban.” The second is re-export via Turkey, the world’s largest scrap importer. As Turkish-Egyptian trade ties deepen, Egypt could buy EU-origin scrap indirectly through Turkey, though it “would add costs.” The third is negotiation, but Ahuja is skeptical, given Egypt is simultaneously fighting to keep its own steel exports flowing into the EU.

Squeezed both ways

The scrap restriction is not the only EU pressure on Egyptian steel. Egypt has already lost about USD 213 mn in steel exports due to anti-dumping restrictions in the EU and the US, Hanafi says. He points to Sudan, Libya, and Lebanon as the strongest alternative outlets. “No foreign competitor can reach these countries at a lower cost than Egypt,” Hanafi argues, citing geographic proximity, stable domestic energy supply, and the large presence of Egyptian contractors and labor there.

How probable is this ban? Ahuja is pricing in a ban, noting that the underlying EU politics “to strengthen the domestic industry” make that close to a foregone conclusion. That said, she doesn’t think the current draft is final. There’s still room for Egypt to lobby its way back into the authorized-country list before the rule takes effect, but she frames the price of doing so in explicitly transactional terms. It would likely require Egypt to offer the EU something in return, such as “reciprocal access into the Egyptian market” or a credible demonstration that Egypt’s own industry is aligning with EU carbon mechanisms like CBAM.

IN CONTEXT- With this draft regulation, the EU is trying to decarbonize and shore up its own steel industry’s competitiveness, alongside CBAM, which entered its definitive phase in January. European recyclers have pushed back: Eurometal quotes Murat Bayram, president of Germany’s Circular Metal Association, calling export restrictions on recycled metals “the wrong way to go” and Sebastian Will of German recyclers association BVSE calling for “open markets and real demand instead of new export barriers.” Bayram told S&P Global the Commission is “prejudging” recycled metals, warning that “closing off international markets creates neither additional demand nor greater competitiveness in Europe.”

What’s next: The draft is open for feedback until 16 October, with commission adoption — or formal approval — planned for 4Q 2026, and excluded countries can reapply.