The debate in South Africa on steel, scrap and industrial policy as a whole is increasingly framed as a contest between competing interests: large integrated producers, mini-mills, regulators and exporters. However, this framing is incomplete. It treats the issue as a sectoral dispute, when in reality it is a deeper structural misalignment within the country’s circular economy. At the centre of this misalignment is scrap.Scrap metal is not simply an industrial input. It is a recovered resource, generated through a labour-intensive system that is largely informal. Hundreds of thousands of waste pickers and small-scale collectors form the foundation of this system, supplying the material that feeds domestic industry and export markets.Yet policy frameworks do not reflect this reality. The Price Preference System (PPS), introduced in 2013 as a temporary intervention, was designed to secure domestic scrap supply by enforcing discounted pricing to local buyers. Over time the PPS has evolved into something far more consequential: a mechanism that shapes how value is distributed across the entire recycling value chain. In its present form that distribution is deeply uneven.By design, the PPS suppresses scrap prices below international benchmarks. In practice this suppression cascades downward, reducing the income of collectors, limiting margins for independent dealers and concentrating purchasing power among a small number of domestic processors. The economic burden is not shared equally. It is absorbed at the base of the system. This is not simply a pricing issue but a governance issue.Recent concerns about manipulation, buyer-side concentration and the absence of adequate competition oversight point to a broader institutional gap. Where trade policy operates without sufficient integration with competition policy, the risk is predictable: well-intentioned interventions become vehicles for distortion. This is precisely what appears to be unfolding.Meanwhile, the policy justification for these interventions ― that scrap is a “strategic material” ― is not without merit. In a carbon-constrained world scrap-based steel production is more resource-efficient and environmentally sustainable than primary production. Where trade policy operates without sufficient integration with competition policy, the risk is predictable: well-intentioned interventions become vehicles for distortion. This is precisely what appears to be unfolding.Securing domestic supply can, in principle, support industrial development and climate goals. But strategy without system alignment creates contradictions.If scrap is truly strategic, the system that produces it must also be treated as strategic. This means recognising that the circular economy is not only about materials but also about the people, incentives and institutions that enable material recovery in the first place.The policy does not do this. Instead, it attempts to optimise downstream industry while neglecting upstream realities. It treats informal recovery as incidental, rather than foundational. And in doing so it undermines the long-term resilience of the very system it seeks to support.This tension is further compounded by broader industrial policy dynamics. Calls for infrastructure-led demand are valid and necessary. South Africa does need to grow steel consumption through large-scale public investment. But demand-side interventions cannot compensate for structural distortions on the supply side.Nor can competitiveness be built on sustained input subsidies that are implicitly financed by undervaluing informal labour. A more coherent approach would begin by recognising scrap as part of an integrated system, not a standalone commodity.This requires the following shifts:Policy alignment. Trade, competition and industrial policy must operate in a co-ordinated manner, with mechanisms to detect and prevent market distortion, concentration and exclusion.Value recognition. The economic contribution of informal waste pickers must be explicitly accounted for in pricing, planning and policy design. Without this the system will continue to extract value from its most vulnerable participants.System-based reform. Rather than adjusting isolated instruments such as the PPS, South Africa needs to rethink how its recycling economy is structured, from collection and aggregation to pricing, processing and market access.The debate is often framed in antagonistic terms: industry versus exporters, protection versus liberalisation, demand versus supply. But these binaries obscure the real issue. South Africa’s challenge is not to choose between competing interests. It is to design a system in which those interests are aligned.A circular economy cannot function on a structurally distorted foundation. Any policy that treats scrap as strategic while marginalising the system that produces it will ultimately fail to deliver either economic or social value.• Fuma is a circular economy researcher who has developed a conceptual model for integrating informal waste pickers into the formal economy.