In response to the Section 232 tariffs on aluminum and steel imports into the U.S. enacted by President Trump in late March (See page 10 of Newsworthy in this issue for more details.), China has planned to introduce $3 billion in tariffs on U.S. imports. Included among the targeted items is aluminum scrap, which China’s Commerce Ministry says will be taxed at a rate of 25 percent. The country also says it plans to pursue legal action against the U.S. at the World Trade Organization.
These and a number of other actions have kept nonferrous metals traders on their toes in the first quarter.
In the Bureau of International Recycling (BIR) World Mirror: Non-Ferrous Metals, published in mid-March, David Chiao of Atlanta-based Uni-All Group Ltd. (USA), who serves as president of the Brussels-based BIR’s Non-Ferrous Metals Division, writes, “The first two months of 2018 were certainly not quiet. First, China’s Ministry of Environmental Protection confirmed seven batches of import permits, with the total volume of nonferrous mixed
He also cites the U.S. Section 232 tariffs on aluminum imports and the possibility of a trade war “unless the USA reaches a compromise with them.”
Chiao says other countries are stepping in to fill “the vacuum left by China,” while technological developments are helping to improve scrap quality.
However, he continues, China’s actions and the U.S. import tariffs on steel and aluminum are combining to pose change and challenges for the recycling industry.
Also writing in the World Mirror, Andy Wahl of TAV Holdings Inc., Atlanta, and vice president of the BIR Non-Ferrous Metals Division, notes that President Bush introduced similar Section 232 tariffs on steel in 2002. He writes that the sanctions were lifted in 2003 “after having little effect.”
However, Wahl predicts the 2018 tariffs likely will have a “much bigger impact.” He writes, “It has already been reported that some old primary aluminum production in the USA will be restarted, while some rolling mills in Canada are indicating that they will build new facilities in the USA and, hence, create new jobs.”
Regarding red metals, Wahl says an excess of furnace-ready units, including No. 1 and No. 2 copper chops and bare bright, are being exported from the U.S. direct to consumers because U.S. consumers are full.
“The spreads for No. 2 wire keep widening as there is clearly more supply than demand. This also applies to other red metals.” – Andy Wahl of TAV Holdings in the BIR World Mirror: Non-Ferrous Metals
“The spreads for No. 2 wire keep widening as there is clearly more supply than demand,” Wahl writes. “This also applies to other red metals.”
Increasing freight rates continue to chip away at processors’ margins. A scrap metals buyer based in Colorado says freight rates are “impacting the price of material on the street.”
While prices for trucking remain high, the buyer says he’s seen some relief in terms of truck availability, though his company is still experiencing dropped loads.