Copper Industry Calls for Restrictions on Scrap Exports

Signed statements submitted to the Department of Commerce this week negate allegations that excess inventories of copper-based scrap are present in the U.S. market, according to a spokesman for the domestic copper industry.

The submissions of the five copper industry executives respond to assertions by the Institute of Scrap Recycling Industries that the metals companies either had extended shipping dates of copper-based scrap for six to eight weeks due to excess inventories or were recently out of the market. 

The conflicting reports relate to a request that the U.S. government temporarily monitor and restrict U.S. exports of copper-based scrap due to shortages in the U.S. market.

The request, filed on April 7 with the Department of Commerce by the Copper and Brass Fabricators Council, Inc., and the Non-Ferrous Founders' Society, blames rising demand in China as responsible for the excessive drain of copper-based scrap and resultant price increases in the domestic market.

The co-petitioners noted that recent forecasts by some scrap recyclers of a substantial slowdown in U.S. exports to China since this March are not reflected by official government data.

Joseph Mayer, president and general counsel for the Copper and Brass Fabricators Council, said that their group is calling for a cap of 450,000 tons of copper-based scrap to be exported a year, a total that would bring the export levels to those of the 1996-2000 time frame.

The figure represents a 40 percent reduction in the amount of copper-based scrap presently being exported, Mayer adds.

In calling for the change, Mayer notes that China, the biggest driver of the surge in exports, has been able to use a host of methods to increase the flow of scrap into the country, including the establishment of the VAT tax, as well as currency manipulation.

Statistics show that in March and April of this year, U.S. exports of copper scrap to China were 50,938 and 48,681 tons, respectively, significantly higher than the 39,642 tons in March and 38,897 tons in April last year.

In May 2004, U.S. exports to China declined to 35,735 tons versus 40,307 tons the same time last year. However, the petitioners claim, the five-month scrap copper export total to China stands at 221,663 tons, compared to last year’s five-month total of 186,590 tons.

The deadline for the Secretary of Commerce to determine whether or not to impose controls or monitoring is July 22.

The metals companies that submitted the statements are: Hussey Copper, Ltd., Pittsburgh, PA; Metals Group of Olin Corp., East Alton, IL; Cambridge-Lee Industries, Reading, PA; Mueller Copper Tube Products, Inc., Wynne, AR; and Extruded Metals, Belding, MI.

ISRI filed statements in opposition to the restrictions. In defending its position, ISRI noted that while the domestic copper and brass industry is facing problems, copper scrap supply is not one of them.

Supporting its position, ISRI noted the following:

There is no shortage of available copper scrap.

Export controls are not needed and are counter to overall U.S. trade policy.

Exports are vital to the US trade balance and restricting such exports would eliminate the market for a large portion of copper scrap that is not, and likely cannot be, used domestically.

Last year copper scrap made a positive contribution to the balance of trade exceeding $716 million.

Copper is a global commodity. Thus, prices, which are based on international markets, would not be lowered by export controls and could be forced higher.

Traditional market volatility suggests the current price peak will soon be followed by a price trough.

The domestic copper and brass industry infrastructure has dramatically changed over the last ten years. The secondary smelting industry has all but disappeared from the U.S., primarily because of environmental and other regulatory concerns, resulting in significantly diminished production capacity.