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Letter to the Editor: The economics of making steel vs. exporting scrap

Keywords: Tags  scrap, steel, Steel Manufacturers Association, SMA, Institute of Scrap Recycling Industries, Thomas Danjczek, economic activity


To the Editor:

On behalf of the Steel Manufacturers Association (SMA), I appreciate the opportunity to comment on the article entitled “Recycling industry spurs economic activity” (amm.com, July 23), which references a recent economic impact study commissioned by the Institute of Scrap Recycling Industries.

The SMA agrees that the recycling of ferrous scrap provides significant economic and environmental benefits, and that scrap exports generate additional economic activity in the United States. However, the economic benefits derived from domestic steel production far exceed those associated with the processing and export of ferrous scrap.

Given our nation’s status as a relative low-cost steel producer, it is not economically justifiable for the United States to be the world’s largest net exporter of ferrous scrap while at the same time being the largest net importer of steel products.

The SMA in no way seeks to vilify scrap companies for pursuing export opportunities. Rather, the criticism is targeted at the market-distorting behavior of some foreign governments, including export restrictions on ferrous scrap supplies, massive subsidies to steel producers, government ownership of steel companies, and foreign investment restrictions. For example, more than 30 countries currently impose export restraints on ferrous scrap. Such practices distort markets and prevent the U.S. economy from realizing the benefits of expanded domestic steel production, especially in terms of increased job creation.

U.S. steelmakers can compete with companies anywhere in the world. They should not, however, be expected to compete with foreign governments.

THOMAS A. DANJCZEK
Steel Manufacturers Association

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