Scrap dilemma in US steel market

Scrap dilemma in US steel market

Solutions put forward to bring down steel scrap prices, which skyrocketed in the previous months and reached the levels above $300 per ton due to weak US Dollar and strong scrap demand worldwide, lead to a scrap dilemma in US market recently. It is known that, US mini-mills demanded US Department of Commerce (DOC) to restrict steel scrap exports, with the aim of securing enough material for their own production as they are depending on scrap in the production process. While, mini-mills in US insist on export restriction for steel scrap, analysts are of the opinion that, on the condition that new regulation is implemented, it should not be a regulation preventing international trade. It is stated that scrap prices have increased in line with nickel prices, which reached its highest level for the last 15-years. As increasing nickel prices coupled with weak Dollar and strong demand for scrap, the rise in the price of scrap picked up speed. Chinese demand for scrap to be used for the construction of 2008 Olympic Games was the main drive behind the shortage of scrap worldwide, resulting in increase in the price of scrap. Analysts believe that, DOC should not implement such a regulation, especially after Bush tariffs, restricting imports of several steel products, were turned out to be unsuccessful. In conclusion, certain analysts are not in favor of restriction to be brought on export of scrap, instead they suggest maintenance of stabilization in US Dollar and US to initiate free trade agreements not to reduce its market share in foreign markets, as a solution to scrap dilemma in US market.