On March 10, Bob Stevens, CEO of Impact Forge in Columbus, Indiana, and President of the EMERGENCY STEEL SCRAP COALITION, testified before a hearing of the House Small Business Committee about the steel scrap crisis.
He described for the committee how steel scrap exports from the United States have doubled since 2000, rising from 6.3 million tons in 2000 to approximately 12 million tons in 2003. This sharp increase in steel scrap exports has caused U.S. steel scrap prices to surge to unprecedented levels. It also has led to growing concerns about scrap unavailability.
Steel scrap is the main raw material used by the electric furnace steelmaking industry, the main supplier of steel billets to the forging industry.
Prices for U.S. No. 1 heavy melt scrap (an industry bellwether) have more than doubled, rising from $77 per ton in early 2001 to $156 per ton in December 2003. Current spot market prices are skyrocketing: according to recent reports, U.S. No. 1 heavy melt scrap has sold for prices as high as $300 per ton - levels that are simply unprecedented in this industry.
These sharp price increases and the potential for scrap shortages are having significant, harmful effects on important manufacturing sectors of the U.S. economy. All manufacturers, buyers and consumers of steel scrap, steel, or finished steel products are directly harmed by the rising cost and increasing unavailability of steel scrap, which in turn results in sharply higher prices for steel products such as sheet steel, plate, structural steel beams, reinforcing bar, and finished bar products.
In particular, two mainstays of the U.S. economy, construction and automotive manufacturing, face direct harm from sharply increased steel scrap prices. Companies of all sizes, from the Big Three automakers to small family-owned steel parts makers, are impacted by the crisis.
The Emergency Steel Scrap Coalition has been formed to address this crisis. More information, including the latest news, is available from the coalition’s website at www.scrapemergency.com.