Scrap Market Manipulation

A late-July report in The New York Times, Fuel Subsidies Overseas Take A Toll on U.S., details how governments in China, India and other countries with


A late-July report in The New York Times, Fuel Subsidies Overseas Take A Toll on U.S., details how governments in China, India and other countries with above-average economic growth are shielding their citizens from spiraling gasoline and diesel costs, nullifying the effect that price spikes would have on demand. Citing analysis from energy giant BP, reporter Keith Bradsher found that fuel-subsidizing countries accounted for 96 percent of the world’s increase in 2007 oil consumption.

U.S. and Canadian concrete interests need no reminder of the pain fuel prices have added to a year when most markets are incurring record falloff in residential building activity. Anyone ordering rebar lately here has found that fuel is not the only global commodity whose pricing is affected by foreign governments’ interference in markets. Faced with steep price increases, domestic reinforcing steel suppliers and users are taking their concerns to Washington, D.C.

Commenting on his group’s decision in late June to become a charter American Scrap Coalition (ASC) member, National Precast Concrete Association President Ty Gable noted, There’s an imbalance in the world market for scrap steel because other countries have erected barriers on exports. It is more expensive for U.S. companies to import steel, [and] precasters end up paying sharply higher prices [for rebar].

NPCA, Concrete Reinforcing Steel Institute, and American Institute of Steel Construction are among steel-user organizations behind the recently chartered ASC, which calls on federal officials to address trade barriers that have helped fuel up to 100 percent price spikes year-to-date in finished-steel products. Rising scrap costs are beginning to have a chilling effect on the construction industry and the U.S. economy, affirms AISC President Roger Ferch. The growing use of steel scrap export taxes by foreign governments is artificially increasing the cost of steel scrap in the U.S. and driving up domestic costs unfairly and in an anti-competitive way.

More than 20 countries limit their own scrap exports, including China, Russia, India, Indonesia, and Ukraine. They are protecting their own industries, at the expense of the United States and the rest of the world. There is an urgent need for the government to take appropriate steps to eliminate these trade barriers, adds Coalition President Alan Price, a partner with ASC’s Washington, D.C., counsel, Wiley Rein LLP.

On behalf of 3,200-plus steel-consuming companies its members represent, the Coalition seeks to enlist Congress, the U.S. Trade Representative and Commerce Department in identifying and removing barriers to trade in steel scrap. Based on a high recycling factor in the U.S. carbon steel industry, which in 2007 processed 60 million tons of scrap in its electric arc furnaces, the group will also promote policies to encourage recovery of recycled scrap material in new steel.

Companies and industry groups wishing to join ASC can register at The more support the coalition gains, the better the chance of convincing key U.S. government officials and agencies not to bend on discussions involving foreign governments’ scrap steel market manipulation.