United States – The US Institute of Scrap Recycling Industries (ISRI) has called for ‘vigorous enforcement’ of trade laws and other efforts by the US government and other trade leaders to ensure that China remains committed ‘to rein in excess production capacity’ for crude steel. ‘Immediate action is needed to prevent growing trade tensions and recurring crisis,’ ISRI’s chief economist Joe Pickard stated this week prior to a US Department of Commerce hearing.
A combination of many factors, including the surge in Chinese steel production to more than 800 million tonnes per annum, has resulted in ‘some of the most difficult market conditions faced by scrap recyclers and the steel industry in a decade’, according to ISRI.
‘Even as Chinese steel output has crested, US exports of ferrous scrap to China plunged from approximately 5.5 million tonnes in 2009 to less than 400 000 tonnes in 2015,’ Pickard noted.
‘Cheap iron ore prices have not only provided incentives for Chinese steel mills to produce excess amounts of steel that have weighed on prices along the global ferrous supply chain, it has also disincentivised ferrous scrap usage in China,’ he added.
Pickard pointed out that the total value of ferrous scrap processed in the USA was US$ 26.1 billion in 2014 whereas the 2015 figure dropped to US$ 18.3 billion as scrap prices and volumes declined owing to a range of domestic and global market issues.
‘Given the combined impacts of global and domestic market factors, scrap processors have seen their profit margins erased amid continued industry consolidation, with a growing number of scrap recyclers either scaling back their operations, merging with other companies or closing their doors altogether,’ Pickard explained.
ISRI estimates that ‘well over 100’ scrap recycling facilities have closed their doors in just the last two years while more than 11 000 recycling jobs have been shed since early 2015, ‘representing lost income of more than US$ 500 million’.
According to Pickard, this does not include indirect job losses, lost tax revenues, reduced domestic and export sales, and other economic costs.
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