BIR World Mirror Non-Ferrous 96, 2010/12

Industry structure promotes competition

A recent front-page article in American Metal Market described nervousness on the part of one major metal importing province in China that scrap industry consolidation was, in essence, a threat to the competitive nature of our business. It is true, there has been and will likely be a trend of mergers in our business that will create yet larger companies, resulting in fewer supply sources for buyers around the world. This trend has been evident for decades, and it is not unique to the scrap metal industry.

While fears in China may be sourced by perceptions born in the iron ore business, the scrap industry remains fiercely competitive and is broad-based enough that consuming nations need not fear pricing collusion, or the ability of one or two large companies to control prices.

I believe that buyers in any country should realize that the structure of the non-ferrous scrap industry in developed countries promotes competition, and consequently there is little to fear. Buyers in countries that have restrictive export policies for scrap or for mined raw materials should be far more fearful of overseas governmental retribution by limiting scrap exports to such nations than of the notion that the scrap industry has the ability to conspire to “fix” the prices at which its metals are traded.

This being the last issue of the World Mirror for the year, I wish each of you, your associates, and your families the very best for a successful and healthy 2011.

Robert Stein
Alter Trading (USA)
President of the Non-Ferrous Metals Division
24 November 2010

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