Scap iron is a usual ingedient in making new steel. Even in so called intergrated steel mills which process iron ore into steel, some of the raw material is also scrap iron (in electric furnace 'mini mills' the raw material is entirely scrap iron, but those sort of facilities were not common at that time). Just like the iron ore is chemcially transformed to pure iron with controlled amounts of carbon and alloying elements, so is the scrap. So, making airplane parts out of steel (whole ariplanes weren't made of steel of course) whose manufacture included some wrought iron or cast iron scrap is not 'making airplanes out of scrap' any more than it is making airplanes directly out of iron ore.
If such scrap proved unusable, it was something about the nature or quantity of the scrap (perhaps more than could be used, afterall) wrt to the particular steel plants, not about the end use of the new steel. But usually, relatively big pieces of old iron or steel (of any quality) are the easiest to use in a steel mill and have the greatest value per unit weight among scrap. Shredded cars are a (or even *the*) major modern source of scrap iron, but has a more impurities to get rid of per unit weight (paint, oil, dirt, non metallic stuff that gets through the scrapping process, etc).
In the US also in WWII the demand for more steel, which was one of the main bottlenecks in US war production, rather than labor or fuel or most other materials (except rubber, tin and some other stuff controlled by the Axis), resulted in 'scrap drives' where unfortunately a lot of military artifacts like historic cannon were sacrificed.
Joe