Scrap metal industry enjoys higher prices and stronger demand as lockdowns ease. China’s resurgent production of steel and the impact on its attempts to reduce its carbon footprint prompted tax changes from 1 May which should benefit recyclers and exporters.
China’s foreign ministry website announced on 28 April a cut in the import duty on pig iron, crude steel and recycled steel – ferrous scrap – to zero. It also said that VAT rebates on the export of 146 steel products, introduced a year ago, would be removed. The list includes hot rolled coil, wire rod, rebar, cold rolled steel sheet, hot-dip galvanised sheet and narrow strip.
No rebates for duties on exported cold-rolled coil and hot-dip galvanised steel were announced although some observers are anticipating a cut from the current VAT rate of 13% to perhaps 4%. The rebate regime was put in place as output slowed under the Chinese Covid-19 lockdown.
’The measures will reduce the cost of importing, expand the import of iron and steel resources and lend downward pressure to domestic crude steel output, guiding the steel industry towards the reduction of overall energy consumption, promoting the transformation and high-quality development of the steel industry,’ the ministry said.
The moves appear to have boosted trade as Turkish deep-sea scrap import prices rose by more than US$ 20 in the days following.
Indicators of stronger markets came from the US Bureau of Labor Statistics which reported a near 60% rise in recycling industry producer prices in the US from March 2020 to March 2021. The growth among all commodities was second only to copper (62.7%). The American Iron and Steel Institute said that capacity utilisation for US domestic raw steel production in mid-April was 77.6%, close to the pre-pandemic norm of around 80%.
The US economy is clearing picking up. The Census Bureau and US Department of Housing & Urban Development noted that privately owned housing units authorised by building permits in March were running ore than 30% above the March 2020 rate. Privately owned housing starts in March were 37% above the March 2020 figure.
Unsurprisingly, the ferrous sector featured prominently at the 2021 ISRI Convention in late April. Ben Pickett, general manager for public affairs at Nucor, urged President Biden to retain the Section 232 tariffs to tackle imports of products seen as threatening national security. He said it was an effective policy and was needed to prevent ‘a new surge’ from China, especially if the Biden plan to spend US$ 2 trillion on infrastructure led to an increase in steel imports.
‘232 helped the US to invest in cleaner steel technology instead of importing dirty steel,’ he argued. ‘Lifting the tariffs without resolving excess capacity will open the floodgates.’ Pickett was speaking ahead of Nucor announcing record quarterly consolidated net earnings of US$ 942.4 million for the first quarter of the year. By comparison, it reported net earnings of US$ 398.8 million for Q4 2020 and a lowly US$ 20.3 million for Q1 2020. Steel Dynamics was another steel company boasting record Q1 financial results. It reported net sales of…
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