Global steel shortages have provided an unexpected reprieve for automakers as they prepare to meet new European Union laws that will govern vehicle recycling in 18 months’ time, reports Automotive News Europe.
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The present high price of the commodity also looks likely to make the environmental initiative a success because it will underwrite the extra cost of recycling.
“The issue’s been saved by the current price of scrap steel,” explains Max Pemberton, an analyst at autelligence.com in London.
Global demand has pushed the price of a ton of scrap steel to 220 euros from less than 100 euros a few years ago.
“As long as the price stays high, people will want to do this (recycling) business,” Pemberton says.
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By GlobalDataA return to lower steel prices would change that picture, but Nicholas Lee, head of technical affairs for PSA/Peugeot-Citroen in the UK, says: “We don’t believe prices will go down much. Even if they did, we believe (recycling) would still be profitable.”
But some automakers have reservations about the overall approach to the issue.
“Different implementations across the EU, and the Directive’s ambitious targets pose real challenges, said Bernd Gottselig, manager vehicle recycling at Ford of Europe in Cologne, Germany.
He added that EU recycling quotas set for 2015 “create no environmental benefit” and said there are better ways to deal with end-of-life vehicles.
Nevertheless, the improved economics for dealing with end of life vehicles are a relief to automakers, which face potential annual recycling liabilities of many millions of euros when the new regulations come into effect in January 2007.
A cornerstone of Directive No. 2000/53/EC – popularly known as ELV – is that vehicle disposals incur no cost to their final owners. That means that automakers will be legally responsible for collecting, dismantling and shredding old or written-off cars and light commercial vehicles.
