The SMA issues a call to action on ‘predatory levels” of steel scrap exports

Jul 01, 2010 | 06:42 AM | THOMAS A. DANJCZEK

The competitive position of electric-arc furnace (EF) steel producers is dependent on an adequate domestic supply of reasonably priced ferrous scrap.

The United States owns the world's largest ferrous scrap supply. Unfortunately, U.S. policymakers are seemingly non-responsive to scrap export policies affecting the competitive position of domestic EF steelmakers. Through apparent indifference to predatory levels of steel scrap exports, they are permitting five countries—China, Turkey, South Korea, Taiwan and India—to abuse their access to the U.S. scrap supply, excessively draining the supply and triggering U.S. scrap market inflation.

These five countries obtained one-third of the U.S. scrap supply in 2009, accounting for 75 percent of U.S. scrap exports that year. They are undermining the American scrap supply, obtaining the largest tonnages of scrap exports in U.S. history. If these levels of scrap exports continue, they will potentially injure the competitive position of U.S. electric furnace steel producers, who now produce the dominant share of U.S. steel.

Moreover, given the involvement of other governments in world steel scrap trade, there is limited trade equity. Some countries simply prohibit scrap exports. Others, like China, impose export taxes to impede the flow of their domestic scrap overseas. Not one of them would countenance the export of up to one-third of their available supply. They are too energy-conscious to permit this, given their high sensitivity to the needs of their domestic steel industries. In effect, these are discriminatory trade policy actions which, if not eliminated, will leave the U.S. with little option but to adopt its own scrap conservation policy.....