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Friday, 21 November 2008
Mainland Firms Default on Scrap Metal Deals
Mainland scrap metal buyers have reneged on about US$1 billion in contracts from merchants in the United States as the market for the steelmaking raw material collapses, the Institute of Scrap Recycling Industries said.
Bloomberg in Toronto and New York 20 November 2008
Mainland scrap metal buyers have reneged on about US$1 billion in contracts from merchants in the United States as the market for the steelmaking raw material collapses, the Institute of Scrap Recycling Industries said.
Steelmakers, foundries and traders, ranging in size from small to very large and some with partial state ownership, have cancelled contracts, refused delivery of shipments or demanded lower prices, according to Robin Weiner, president of the Washington-based scrap merchants’ trade group.
Ms. Weiner is lobbying the US government to help stop defaults on contracts between the institute’s members and clients in the second-largest market for US scrap steel after Turkey.
Scrap merchants worldwide face plummeting prices after mills slashed output amid a worsening global economic recession.
“Some steelmakers and traders did ask to renegotiate the price of lower-valued shipments,” said Wang Zhenwu, executive vice-president of the China Association of Scrap Metal Utilisation. “But the amount couldn’t be as much as US$1 billion.”
The price of steel scrap No1 heavy melting, shipped from the US east coast, has slumped 61 per cent in the past two months and traded at US$120 per tonne on November 13, according to Metal Bulletin.
US sales of scrap to 152 countries last year totalled US$22 billion, making it the second-largest commodity export by value, the institute said.
“Based on conversations I’ve had with members throughout the country, we’re talking about hundreds of millions of dollars and could be over a billion dollars,” Ms. Weiner said.
The number in past years has been “insignificant”. Contracts with steelmakers and brokers also had been broken in Europe, Canada, Vietnam and South Korea, she said.
Delinquencies in China had been most prevalent and extended beyond steel to other scrap markets like copper, fibres and plastics, she added.
Once demand steadied, US buyers might seek stricter trade terms with their Chinese counterparts, including advance payments and letters of credit, said Bob Garino, the US institute’s director of commodities.
Mainland scrap steel imports would be less than 3 million tonnes this year compared with 3.3 million tonnes a year ago because mills were using more iron ore after prices fell, Mr. Wang said earlier.
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Mainland Firms Default on Scrap Metal Deals
Bloomberg in Toronto and New York
20 November 2008
Mainland scrap metal buyers have reneged on about US$1 billion in contracts from merchants in the United States as the market for the steelmaking raw material collapses, the Institute of Scrap Recycling Industries said.
Steelmakers, foundries and traders, ranging in size from small to very large and some with partial state ownership, have cancelled contracts, refused delivery of shipments or demanded lower prices, according to Robin Weiner, president of the Washington-based scrap merchants’ trade group.
Ms. Weiner is lobbying the US government to help stop defaults on contracts between the institute’s members and clients in the second-largest market for US scrap steel after Turkey.
Scrap merchants worldwide face plummeting prices after mills slashed output amid a worsening global economic recession.
“Some steelmakers and traders did ask to renegotiate the price of lower-valued shipments,” said Wang Zhenwu, executive vice-president of the China Association of Scrap Metal Utilisation. “But the amount couldn’t be as much as US$1 billion.”
The price of steel scrap No1 heavy melting, shipped from the US east coast, has slumped 61 per cent in the past two months and traded at US$120 per tonne on November 13, according to Metal Bulletin.
US sales of scrap to 152 countries last year totalled US$22 billion, making it the second-largest commodity export by value, the institute said.
“Based on conversations I’ve had with members throughout the country, we’re talking about hundreds of millions of dollars and could be over a billion dollars,” Ms. Weiner said.
The number in past years has been “insignificant”. Contracts with steelmakers and brokers also had been broken in Europe, Canada, Vietnam and South Korea, she said.
Delinquencies in China had been most prevalent and extended beyond steel to other scrap markets like copper, fibres and plastics, she added.
Once demand steadied, US buyers might seek stricter trade terms with their Chinese counterparts, including advance payments and letters of credit, said Bob Garino, the US institute’s director of commodities.
Mainland scrap steel imports would be less than 3 million tonnes this year compared with 3.3 million tonnes a year ago because mills were using more iron ore after prices fell, Mr. Wang said earlier.
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