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May 2004

U.S. Metals Industries Turn Focus on Export Controls and China

Washington— Two metals industry groups formally requested that the government exercise its legal authority by temporarily monitoring and restricting U.S. exports of copper scrap and copper-alloy scrap, according to an industry spokesman. The petition points to rising demand in China for the excessive drain of the scarce metals materials and the resultant price increases and shortages in the U.S. market.

Statistics presented in the petition demonstrate that the rapid increases in exports of the subject metals are the primary cause of dwindling domestic supply and sharp price increases.

The petition states that adequate volumes and reasonable prices for these essential raw materials are central to meeting the U.S. economy’s needs successfully. “Such scrap, however, is now in very short supply and obtainable only at high and rising prices,” the petition concludes. “It is just this sort of predicament that Congress intended to address in the Export Administration Act by means of temporary export controls and monitoring of exports and contracts for exports.”

China — with its explosive growth, insatiable demand for scrap, and high prices that Chinese purchasers are willing to pay to source U.S. scrap — is targeted as the major global culprit in this supply and demand tight spot. According to the petition, essentially all growth in U.S. exports of copper-based scrap in recent years has been attributable to rising consumption in China. In 1999, the U.S. exported 86,601 metric tons of copper-based scrap to China, which accounted for just 27% of total U.S. exports. In 2000, that volume increased to 43% of total U.S. exports. During 2001, U.S. exports of copper-based scrap to China rose to 316,739 metric tons or 56% of total exports. Another jump occurred in 2003 when 532,901 metric tons of exports to China represented 71 percent of total U.S. exports.

In keeping with the urgency of the situation, the statute calls for expedited consideration of the petition. Within no later than 105 days after the petition’s filing, the U.S. Department of Commerce must determine whether to impose temporary monitoring and export controls. Within 45 days thereafter, final regulations are published to implement the relief granted.

Copper and its alloys constitute one of the major groups of commercial metals. They are used in a wide variety of industries. Building construction is the single largest market for these metals, followed by electronics and electronic products, transportation, industrial machinery, and consumer and general products. Copper ranks third after iron and aluminum in terms of quantities consumed.

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