World-wide steel scrap shortage hits US, parts of Asia

A world-wide steel scrap shortage, largely created by massive Chinese demand, is creating "havoc" for US industries and forcing emergency action to cap prices in parts of Asia.
American steel-consuming industries pleaded for the government to suspend all anti-dumping and anti-subsidy tarrifs on imports, meeting swift and sharp opposition from the US steel industry.
Steel scrap prices in the United States - measured by the benchmark "number one" heavy melt scrap - doubled from 77 dollars a tonne in early 2001 to 156 dollars a tonne in December 2003 before skyrocketing to an unprecedented 302 dollars a tonne last month.
"These sharp price increases and the potential for scrap shortages are having significant, harmful effects on important manufacturing sectors of the US economy," said the Emergency Steel Scrap Coalition, grouping steel makers, auto parts manufacturers and other industries.
Scrap exports from the United States doubled from 6.3 million tonnes in 2000 to about 12 million tonnes in 2003, the coalition said.
The pain is being felt by steel consumer industries, just three months after they celebrated President George W. Bush's decision to rescind import tariffs aimed at protecting the domestic steel industry.
A steel shortage was "causing havoc for US manufacturers" said the Consuming Industries Trade Action Coalition (CITAC).
"US manufacturers are facing major steel supply disruptions and shortages that could contribute to plant closures and job losses in a matter of weeks or months," CITAC said in a statement.
CITAC chairman Michael Fanning called on the Bush administration to suspend existing anti-dumping and anti-subsidies tariffs on steel. There are about 131 such orders on iron and steel products, he said. "Under the current crisis market conditions, we believe that these restrictions should be suspended," Fanning said.
A surge in steel prices helps "integrated steel mills", the least efficient part of the American industry, because they barely use scrap and can enjoy the higher prices commanded by steel.
But steel "minimills", which rely heavily on scrap to produce steel, have been hit hard.
"These are very unusual times. There is tremendous uncertainty," said Thomas Danjczek, president of the Steel Manufacturers Association, which represents 90 percent of the American minimills.
Prices were being pushed higher by Chinese demand, a weaker dollar, and foreign trade restrictions, he said.