By Paul Ploumis 07 Aug 2015 Last updated at 08:40:17 GMT
(joc.com): U.S. scrap metal exports took a tumble in the first half of 2015 and are expected to fall even more by year’s end, as the strong U.S. dollar continues to weigh on all American exports.
In the first five months of 2015, U.S. ocean exports of scrap metal fell 4.7 percent year-over-year, accoding to data from PIERS, a sister product of JOC.com within IHS. In May, scrap metal exports were down a whopping 26.5 percent year-over-year, after a 1.6 percent decline in April.
“And the trade outlook for 2015 looks disappointing on the back of a strong dollar,” Mario Moreno, JOC senior economist, said in a recent economic forecast. “Losses in scrap metal exports tend to be associated with gains in the foreign exchange value of the U.S. dollar.”
Moreno estimates scrap metal exports will fall 4.4 percent year-over-year in 2015 alone. Volumes are expected to eventually rebound 8.5 percent next year, but only as the dollar’s value begins to steadily decline.
The stronger U.S. dollar has been on the rise since late 2014, according to the U.S. dollar index which measures the greenback's strength against a trade-weighted basket of six major currencies. However, that ascent will not last forever, however economists expect to dollar to start to slowly inch down as 2016 comes around the corner.
In the meantime, the dollar continues to weigh heavy on U.S. exports.
In a Duke University survey of 1,000 business executives released earlier this year, two out of every three big U.S. exporters — those with at least one-fourth of their total sales overseas — said the appreciation of the dollar has had a negative impact on their businesses.
For the U.S. scrap metal exporting community, that’s meant losing a lot of market share to competitors in Russia and the Ukraine. Since the dollar’s recent meteoric rise has been matched by the swift depreciation of the Russian rouble. Just this week the rouble slid to a new four-month low, according to the Russian Trading System Cash Index.
Turkey is the No.1 importer of U.S. scrap metal, holding 34.1 percent of the market through the first five months of 2015.
“Because of the strong dollar, Turkey has been buying less from the U.S. and more from markets with weaker currencies including Russia and the Ukraine,” Moreno said in his recent forecast.
Year-to-date, U.S. exports to Turkey were up 9 percent. However, that gain follows two years of substantial loss, Moreno pointed out. Exports to Turkey were down 28 in 2013 and 27 percent in 2014.
America’s second-ranked market for scrap metal, Taiwan’s market share fell 32 percent year-over-year to 14 percent in the first five months of 2015.
The U.S. ports that stand to lose the most from a decline in U.S. scrap metal demand include ports in New York, Los Angeles, Oakland, Long Beach and Tacoma, which together handle more than 50 percent of all scrap metal leaving the U.S.
January through May, the Port of New York and New Jersey handled the most international outbound shipments of scrap metals, with a 17 percent share of the trade in terms of metric ton volume, down 3 percentage points over the same period in 2014. The Port of Los Angeles handled 14 percent, up 4 percentage points over the same period in 2014. The Port of Oakland handled 12 percent of the scrap metal export traffic, unchanged from its share in 2014.
While it appears the fate of the U.S. exports and the U.S. dollar are indivisible, Moreno did add that there have been occasions where the two acted independently of one another. According to Moreno, scrap metal exports tumbled 17 percent in 2014, while the world exchange rate per U.S. dollar increased 3.1 percent.
“Correlation,” Moreno said, “does not imply causation.”
Courtesy : www.joc.com