raw steel production and changes in mill inventory; the
quantities generated and utilized are essentially equal to and
independent of purchased scrap prices.
Prompt industr ial scrap is that which is left over when
proóucts are manufactured from steel. For example, when a
fender is stamped from a sheet of steel the unused portion is
sold for scrap. It is "prompt" in the sense that manufacturers
have to get rid of it promptly or be inundated with scrap.
The mills prefer prompt industrial scrap because it is usually
clean, of known composition, and chemically unchanged by use
or exposure to weather. The supply of prompt industr ial scrap,
is relatively stable.
Obsol escence scr ap ar i ses by ag ing and obsol escence of
ferrous products until they are discarded as scrap iron (old
car bodies, old steel rails, salvage from shipwrecks, etc).
Not all ferrous products discarded have been recycled and these
make up a reservoir of material, some of which could be collected
and cut, bundled, or otherwise prepared for marketing by scrap
processors, then resold for melting.
The cost of collecting
and processing these materials for sale as iron and steelmaking
scrap will, of course, be determined by such factors as their
geographic dispersion and the ease and speed with which they
can be collected and processed. Because of domestic freight
rates, obsolescence scrap generally must be processed at or
near the place where it is collected. Collection and transportation of obsolescence scrap is a function of price. High
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prices for scrap encourage more investment in scrap-processing
equi~nent and more collecting from areas that would not normally
be scrap territory, World demand for scrap increased sharply.
in 1973 corresponding to the increased world production of iron
and steel. Increasing domestic demand combined with high
expor ts 1 ed to scar city of qual i ty scr ap for use in domestic
steel mills and foundries. As a result U.S. prices for ferrous
scrap rose to a record height in the lat~er'half of the year.
On July 2, 1973, the U.S. Department of Commerce imposed
export restrictions on ferrous scrap unàer the .short supply"
provisions of the Export Administration Act of 1969. No new
orders .for ferrous scrap of more than 500 net tons could be
accepted for the balance of 1973. Individual allocations were
distributed by exporter, country, and grade, based on each
expor ter i s history of scr ap expor ts dur ing the base per iod
from July 1, 1970, to June 30, 1973.
This quantitative limitation on the export of scrap from
"the United States precluded further expansion of the U. S.
scrap industry, limited its profits during the recent boom, and
benef i ted steelmaker sat the expense of scr ap dealer s. Since
the scr ap industry appear s to be one in which the U. S. has a
comparative advantage, this limitation should be viewed as
counterproductive. Permitting unrestricted exports of scrap
. would have resulted in foreign exchange earnings that would
have been expected t6 raise the real income of the U. S.
economy.
