For much of the month of March, processors
Opinions on the matter are wide-ranging, and the announcement disrupted domestic and international markets, as you can read in the article “Trump’s tariff talk stirs international markets,” on page 10 of this issue.
While it’s clear that opinions differ on the topic of the tariffs, what is less clear is the impact they might have on scrap consumption and pricing.
In its “Ferrous Beat” e-newsletter dated March 16, 2018, the Institute of Scrap Recycling Industries (ISRI), Washington, states, “For recyclers, the implications will be determined by the market. There is speculation that raising the cost of steel and aluminum imports will boost production in the United States, but it is also not anticipated that production in other countries will abate.”
ISRI says it will track steel and aluminum markets, advising its members on their reactions.
"While it’s clear that opinions differ on the topic of the tariffs, what is less clear is the impact they might have on scrap consumption and pricing.”
ISRI hosted a webinar on the tariffs March 16. The association’s Chief Economist and Director of Commodities Joe Pickard said that when the U.S. government last enacted Section 232 tariffs on steel in 2002, no retaliatory efforts were taken by other governments that affected the flow of ferrous scrap. In fact, ferrous scrap export flows trended upward over the period, as did imports.
Prices also trended upward, with the domestic composite price for No. 1 heavy melting steel (HMS) increasing 105 percent during the tariff implementation period, Pickard noted. A year after the tariffs were removed, that price was 177 percent higher compared with the average price of No. 1 HMS prior to implementation.
Regarding the 2002 tariff’s impact on jobs in the steel industry, he said no jobs were created, though it “stopped the bleeding” the sector had been seeing. The 2018 tariffs, according to an analysis by Trade Partnership Worldwide LLC, are expected to save more than 26,000 steel and aluminum industry jobs, Pickard said. However, more than 495,000 jobs in other sectors might be lost because of the tariffs and the increased costs that steel and aluminum consumers will face.
Those job losses could be exacerbated if our trading partners introduce retaliatory tariffs, he said, which is what China said it would do as of late March. China’s planned tariffs would apply to aluminum scrap imports, which would be taxed at a 25 percent rate, and to steel pipe imports, which would be taxed at 15 percent, among other items.
While still far from clear, we hope you’ll turn to Recycling Today for further insight and analysis as the tariff picture develops.