Will China's policy on construction reduce exports?

This week there are several industry meetings that could shed some light on the direction of the ferrous and non-ferrous recycled metals and OBM markets.

Last week many scrap exporters attended the International Rebar Exporters and Producers Association (IREPAS) meeting in Paris where a great many long products producers gathered to update the state of their industry. The Recycled Materials Association (ReMA) is also presenting its Roundtables in Chicago this week. Finally, the International Iron Metallics Association (IIMA) is conducting it biannual meeting in Houston. It’s from here that I’m writing this article.

As RMU’s Stephanie Ritenbaugh has reported, it has been a busy week as we approach the end of Q3. The Fed has come through with a meaningful interest rate reduction. The thought is that lower interest rates will help the steel, automotive and scrap metal industries. Although it has had little effect thus far, the longer-range benefits should accrue going forward. The trade is hoping that the malaise in the steel sector and its not-too-distant relative, the scrap sector, will have a breakout in the coming months.

Of course, it’s not a sure thing that China is on track to export 80 million metric tons of finished and semi-finished steel to the rest of the world. That is almost as much as the U.S. produces in a year. This is mind boggling. The exports are negatively affecting the domestic steel production of several countries in South Asia. Their billet exports to Turkey are putting a damper on the amount of scrap they need. Scrap exports off the U.S. West Coast have been sharply reduced by this.

However, some good news came in Tuesday. The Chinese government announced it will start programs to support its construction and steel industries. This may help to keep some of the country’s production at home. Is that the answer? Of course not. They have to whittle down their production and start to get greener. After all, their exportation of blast furnace-produced steel is making it more difficult for other countries to sell their greener production and to decarbonize. Needless to say, this is a big problem.

RMU will have continued updates about issues discussed at both the ReMA and IIMA conferences as the week goes on.