For scrap processors, claims by steel mills about "a crisis
situation with respect to steel scrap" amount to a recycling of
memories from 2004 and, for old-timers, from 1979 and 1973.
Efforts to obtain government intervention in tight scrap
markets in the 1970s were successful the first time, when
temporary export ceilings were set, but unsuccessful the
second. The 2004 mini-mill initiative faded when participants
couldn't agree on whether to seek U.S. Commerce Department
intervention, either for export controls or formal
Today, the American Scrap Coalition (ASC) is pushing for
U.S. trade negotiators to fight for the removal by other
nations of their export taxes and quotas. The group, comprised
of U.S. mini-mills, argues that such hurdles send Asian and
European scrap buyers to U.S. markets instead of countries
The ASC declines to specify its legal strategy beyond saying
it might ask the U.S. Trade Representative "to take action
against one or more countries with particularly egregious
The September decline in scrap prices has taken some of the
steam out of the ISRI-ASC debate.
Joel Denbo, chief manager of operations at Decatur,
Ala.-based Tennessee Valley Recycling LLC and former ISRI
chairman, said he still surmises an eventual quota campaign. "A
rose by any other name," he said.
U.S. mills are selling more steel because the weak dollar
spurred sales abroad, Denbo said, and recyclers should be able
to do the same. "We want to export when export is logical for
our product. It's all based on supply and demand. You've got a
The scrap export volumes of early to mid-2008 might seem
huge when viewed over a 10-year span, but Denbo said he can
personally recall several earlier periods when comparable
quantities left the United States.
"Exports of the products ISRI represents are a tremendous
benefit toward the balance of trade," he said. "They're good
for the United States. Now, does it make our customers
potentially have to pay a bit more for scrap? It happens. But
it's the dynamic of a free marketplace."
Denbo noted that his own company hasn't exported any ferrous
scrap this year except for stainless steel and a high-manganese
The free market has been hard on the steel industry during
the past 10 years, he said, but the outcome argues for leaving
government on the sidelines. "The steel industry got its head
knocked in and suffered some hellacious times" over the past 10
years, Denbo said. "The strong survived and the weak went by
the wayside. In the end, the domestic steel industry is much
stronger than it could have ever been if that had not taken
James Macaluso, an ISRI board member from the ferrous
division and president of Cleveland Scrap Metals, Cleveland,
said some people felt scrap was overpriced in early 2008 but
that the run-up was caused less by export markets than by a
slowdown in several of the manufacturing industries that
generate prime grades of scrap.
"Export has taken a lot of our scrap, but with industry
slowing down the prime scrap is just becoming harder and harder
to find. I think that is going to continue" until the next
economic recovery, he said. "I don't think it's going to be
Macaluso does see some merit in the ASC's analysis, though.
"On the other side, there's not a lot of scrap moving from
other countries because of taxes. They want to keep their scrap
in the different countries. They don't want to export, so
(foreign consumers seeking to import scrap) have to come here
to buy more. They have to go somewhere for it," he said.
ISRI, as an organization, favors eliminating barriers but
cautions against linking it to claims of a spurious "steel
scrap export crisis."
"We have long taken an active position in support of free
and fair markets by advocating for the removal of export
controls around the world," ISRI president Robin Wiener has
Emanuel Bodner, president of Houston-based scrapyard Bodner
Metal & Iron Corp., said that this year's high prices for
prime industrial scrap derive partly from domestic causes. "If
you're not building cars, if you're not building buildings, if
you're not building appliances, the scrap is going to be
reduced," he said. The impact was amplified, Bodner said, by
international demand for iron units.
But Bodner doesn't see any availability issue with regard to
obsolete scrap. "There are sufficient supplies to address both
domestic and international markets," he said. "There is no
shortage of scrap. The market itself consistently sorts itself
out. The market will determine at what price scrap changes
hands. It always has and it always works."
U.S. export quotas on ferrous scrap in a tight market
wouldn't work and would probably backfire, Bodner said, adding
that he thinks foreign countries' export taxes on ferrous scrap
are equally objectionable and he would encourage U.S.
negotiators to push for their removal. PAUL