Harris: Tariffs on Automotive Could Impact Scrap Prices

Tariffs on cars and trucks made in Canada and exported to the United States could have a significant effect on ferrous scrap prices, says scrap consultant John Harris of Aaristic Services, Inc.

Speaking at a recent meeting of the Canadian Association of Recycling Industries, Harris said if the proposed 20 percent or 25 percent tariff on automotive is put in place against Canada by the United States, then the volume of busheling scrap produced by the auto industry would decline along with auto production.

“As Ontario, Canada, is primarily a busheling exporter, and U.S. mills are attempting to increase their utilization rates above 80 percent [increasing demand for scrap], these opposing forces will drive prime scrap prices higher with less availability from region,” Harris said.

Commenting on current conditions in the scrap market, Harris said demand and pricing for obsolete scrap should hold fairly steady into July. Busheling, on the other hand, could rise because of a planned outage at Nucor’s DRI facility in Louisiana and vacation shutdowns and maintenance outages at manufacturing plants that will lead to a shortfall of prime scrap availability. Prices can be expected to increase in the $10 to $20 per ton range in varying areas.

“From an international perspective, producers in Turkey are sitting on their hands waiting for the NAFTA markets to settle before they re-enter to restock inventories, as Ramadan is now over,” Harris said. “Recent pricing has risen approximately $10 and is holding around the $350/mt range for 80:20 HMS. Likewise, the Far East is holding scrap prices at June numbers.”