A system dynamics analysis for circular supply chains in the steel sector

The steel industry, a cornerstone of global supply chains, is under growing pressure to improve sustainability and resource efficiency. This study develops a system dynamics (SD) model to explore how circular economy strategies can transform the steel supply chain by reducing waste, emissions, and energy consumption. Three key interventions are evaluated: increasing steel scrap utilization by 50%, implementing government policies such as carbon taxation and recycling subsidies, and adopting hydrogen-based steelmaking technologies. Simulation results over a 100-period horizon show that higher recycling adoption reduces total waste by 40%, energy use by 10%, production costs by 12%, and CO₂ emissions by 18%. Policy interventions lead to a 45% decrease in waste, 15% drop in energy consumption, and 32% reduction in CO emissions, despite a short-term 8% rise in costs. The hydrogen-based scenario, while involving an initial 20% cost increase, delivers the greatest sustainability benefits: CO₂ emissions fall by 60%, energy use by 50%, and waste by 55%. These findings demonstrate that integrating circular economy principles through targeted technological and policy actions can significantly improve the environmental and economic performance of the steel industry, supporting long-term resilience and alignment with global climate goals.