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Is the ferrous scrap market heading for an ‘all-out trade war’?

Scrap MetalIn the BIR World Mirror on Ferrous Metals Quarterly report – July 2017, Tom Bird, Chiho Environmental Group, Interim President of the BIR Ferrous Division pointed out during his address to the plenary session in Barcelona, ‘Over the last couple of weeks, we have seen a gradual cooling in prices as Turkey has stepped back, buying at lower levels with the pressure on finished product prices,’ and that ‘low residual scrap has remained particularly strong over recent weeks with healthy demand and shortness of supply. Demand for shredded scrap has followed suit, with a wider than normal premium for shredded over HMS grades.’

Tom Bird expressed ‘concern over the US/China trade war that was starting to build up a head of steam’. Stating ‘The figures are staggering, with China and the USA accounting for US$ 1.4 trillion of the US$ 2.3 trillion estimated to be wiped off global trade.’ He said that prior to the meeting, ‘it seemed that there had been progress in the negotiations, leading to optimism that the USA and China would resolve their differences.’ But this has not been the case as ‘It seems that tariffs and sanctions are escalating and we are approaching a point of no return for an all-out trade war.’

He also pointed out that ‘regulatory issues in China are also on the increase, with the effects on Zorba shipments from the USA having a significant impact on our shredders.’ Also ‘we have the added pressure of tariffs on our products in retaliation for measures imposed by the USA’ as well as the much stricter inspection protocols. Which adds up to a ‘challenging environment for our industry’. ‘Prices of raw materials for our shredders need to reflect the impact of much lower Zorba prices.’

And ‘in terms of steel and aluminium product exports to the USA, it was likely the EU would receive a similar deal to that of Brazil. However, the EU and the USA’s closest neighbour Canada have been hit with stringent tariffs.’ Bird stated at the meeting.

Bird said, ‘The summer months should be interesting and we will hopefully gain more clarity on the direction and magnitude of global trade issues. Demand for our ferrous scrap should remain strong and it is important we maintain a healthy steel sector.’

The next meeting will be in London on 6th October.

Source: www.mirrors.bir.org

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