BIR CONVENTION: Chinese Subsidies Decried

A major consumer of copper scrap expressed concern for the future of free trade at the Nonferrous Division meeting of the Bureau of International Recycling (BIR) Spring Convention, held in Oslo in late May.

“State subsidies give a major price advantage to Chinese copper producers,” declared Hans-Gerhard Hoffmann, executive board spokesperson for Germany’s Hüttenwerke Kayser AG. He said the subsidies represented a form of “protectionism” that was damaging to copper recycling.

Noting China’s recent entry into the World Trade Organization (WTO), Hoffmann remarked, “Free trade cannot be a one way street: Us offering it and others abusing it.” He added that China was “overdue in acquiring mining capacity” since the country “cannot fill its long-term growth just with scrap.”

The guest speaker also suggested that scrap buyers in some parts of the world are procuring larger amounts of scrap before European and North American processors have the chance to handle it and upgrade it. “European refiners in a fair and open market require the full service of traders and merchants: Mechanical pre-treatment, dismantling, cutting and sorting,” Hoffman commented. But now, relationships emanating from the close cooperation between dealers and refiners are “at risk due to unfair competition,” he contended.

Bob Stein of Alter Trading Co., St. Louis, also referred to criticism from domestic scrap consumers concerning exports of highly prized raw materials to countries such as China.

“I don’t accept this,” he declared. “The North American scrap processing industry is not to be blamed for the fact that economics . . . dictate that we face significant challenges in processing our own scrap. In some cases, we can’t afford to extend labor that costs as much in a day as it does in a month in China to prepare many of the products to the demanding specifications of the North American consumer.”

Stein noted that Chinese buyers had effectively penetrated the traditional market all the way down to the smallest U.S. scrap dealers. However, he dismissed calls for protectionism, notably from Europe, with the words: “The free and unencumbered flow of scrap across national boundaries is vital.”

In his market introduction, BIR Nonferrous Division president Marc Natan of Malco SA, France, identified China as the economic “star pupil” in the first quarter of this year with 9.9 percent growth. It remained to be seen, he said, whether the global slowdown and SARS epidemic would seriously affect the country’s industrial output and its import requirements. In world terms, the recovery initially predicted for the middle of this year was likely to be delayed until later in the year and would be “limited in its scale,” he predicted.

Summarizing the world markets, Bjorn Grufman of MV Metallvarden AB in Sweden noted that the combination of SARS and the war in Iraq had created a “severe lack of business confidence” in the Middle East. “Bland” nonferrous activity in North America mirrored the “dull” outlook in Europe, where a shortage of scrap was affecting most countries.

Fernando Duranti, the new BIR president, suggested difficult market conditions had been accompanied by growing administrative problems resulting from ever-stricter environmental legislation. Annual membership dues that might seem expensive to some members were clearly “extremely reasonable” if one considered the work performed by the Brussels-based organization to “monitor the legislation, react to the draft directives or regulations, inform our national federations’ secretariats, write position papers and meet decision-makers,” he commented.