Last Look--What a Difference Three Decades Make

May/June 2005

China might dominate international scrap markets today, but just over 30 years ago the idea of trading with China seemed more speculative than certain, at least for U.S. scrap merchants.
   Still, in November 1971, as President Richard Nixon prepared for his historic visit to the People’s Republic of China, Scrap Age highlighted the possibilities of exporting scrap to the Middle Kingdom. “Not much is known about the Chinese steel industry,” the magazine declared, though U.S. government figures put Chinese steel production in 1969 at about 16 million mt and pig iron and ferrous alloy production at 42 million tons. “It is also known that the Chinese purchased $2 million of Canadian scrap iron in 1970 and have purchased some $2,600,000 worth from Canada in the first eight months of [1971].”
   The potential effect of trading scrap with China was “staggering,” Scrap Age suggested. In a subsequent March 1972 editorial, the magazine advised scrap processors and traders to “keep their eyes open—even wider—and to keep them turned toward the People’s Republic of China.”
   By December 1978, trade with China was definitely underway, though not without difficulty. In an editorial titled “Look East, Young Man—Far East,” Scrap Age stated: “American firms have shipped ferrous and non-ferrous scrap materials to mainland China over the past several years. This trade, however, has not been extensive, and problems have arisen. ... It is here, of course, that the greatest opportunities lie. Whether an American firm participates actively or not, there is little question that in future years, Chinese production of steel will, in some way, affect our domestic markets.
   “We encourage the North American scrap industry to become involved not only with the logistical and market potential of the Chinese mainland, but with their customs and trade practices as well. ... It behooves us all to expand our own horizons by first learning the Chinese culture and way of doing business and then—in the appropriate manner for Chinese business practices—pursuing this potentially dynamic new marketplace.”
   In that same issue, Scrap Age also reprinted a U.S. Department of Commerce report—titled “China’s Steel: The Key Link”—that noted China had produced some 23.8 million mt of crude steel in 1974 compared with U.S. production of 132.3 million mt. The growth potential for China’s steel industry rated only a “qualified ‘good,’” the report stressed , due to various problems, especially involving raw materials. 
   “The Chinese have had to turn increasingly to foreign sources of ... steel scrap to round out the supply of metallics charged to their steelmaking furnaces,” the report said, noting that in 1973 the United States had shipped China “over a half million tons of steel scrap.” But the report also highlighted the impact of export restrictions on ferrous scrap in the early 1970s: “Steel scrap, where the U.S. had been a significant supplier in 1973 prior to the imposition of U.S. short supply controls, will continue to be required to ease the tight metallic supply situation. The Chinese purchase of more than $10 million worth of American scrap in May 1975 appears to signal a return of the PRC into the U.S. scrap market now that short supply controls have been dropped.”

China might dominate international scrap markets today, but just over 30 years ago the idea of trading with China seemed more speculative than certain, at least for U.S. scrap merchants.