Scrap export market seen facing multiple challenges

By  Paul Ploumis 20 Aug 2015  Last updated at  07:22:31 GMT

TORONTO (Scrap Monster): The North American export markets are seen passing through extremely difficult times. The devaluation of Chinese yuan has impacted the export volumes to that country. In addition, shippers suggest that inspection authorities at Chinese ports have further tightened their inspection procedures. The Green Fence initiative implemented by that country had resulted in strict inspection of cargoes at Chinese ports.

Several factors are seen impacting North American shipment of recovered materials to outside destination. First and foremost, the Chinese administrative decision to de-value its currency has created much panic among exporters to that country. The yuan devaluation is expected to make Chinese goods more attractive among world countries. Consequently, demand for dollar-denominated US and Canadian recovered materials is likely to decline significantly.

In addition, the devaluation in currency will further boost Chinese efforts to rely on domestically available scrap, rather than excessively depending on imports from North America and European region. Recycling participants note that Chinese demand for imported scrap items has seen considerable decline during recent months. A further devaluation of the Chinese currency may lead to further drop in demand for foreign-trade materials.

According to US exporters of secondary materials, the Chinese customs inspectors have initiated enhanced inspection procedures of loads in Chinese ports. Though Chinese officials stated that the beefed-up checking procedure is only an attempt to ensure that contaminated loads doesn’t pass through the country’s ports, some US exporters refer the tightened inspection procedures as “Green Fence-II”.

On the other hand, some exporters noted that shipping costs have fallen to their recent low levels on account of reduced freight fuel costs and increased competition among shipping lines.