U.S. IMPORTS OF FERROCHROMIUM BY COUNTRIES 1967-1974 (IMPORTS FOR CONSUMPTION) (Chrome Content. Short Tons) 1967 1968 1969 1970 1971 1972 1973 1974 Low High Low High Low High Low High Low High Carbon Carbon Carbon Carbon Carbon Carbon Carbon Carbon Carbon Carbon Total 32,827 5,646 35,773 5,229 26,058 10,848 18,853 7,592 26,973 26,965 46,249 44,017 30,826 69,529 30,737 71,31 SOURCE: Minerals Yearbook and FT 246 Imports: TSUSA Commodity by Country 1972, Mineral Industry Surveys, CONSUMPTION A restricted supply of ferrochrome would cause serious problems not only to the American specialty steel industry, but to the entire country. As mentioned previously, chromium is a critical material, essential to a wide variety of defense and civil applications. Industry projections indicate stainless steel shipments will increase to about 1.5 million tons by 1975, reaching 2.3 million by 1980.50 Between now and the end of this decade, the specialty steel industry will need at least 750 thousand tons of ferrochrome— assuming no changes are made in the current ecological demands.1 Recently announced EPA standards radically alter these projections. As it now stands, automobile emission control employs 10 pounds of stainless steel per year for this application alone." 52 Reaching even minimum levels of specialty steel production may be difficult, however, if ferrochrome availability is artificially restricted. Even if the Rhodesian sanctions are not reimposed, United States steelmakers must compete with other countries for ferrochrome. Third country demands for chromium over the next 25 years are anticipated to exceed those of the United States by 335 percent, reaching 84.1 million tons by the year 2000.53 The effect of the supply-demand squeeze is already being felt in this country and elsewhere. Japan, which produces nearly twice the ferrochrome as the United States," was 50,000 tons short for domestic requirements last year." Prices for high carbon fer American Metal Market, May 23, 1973. 51 Id. Id. NMAB Report. 53 Id. Bureau of Mines Bull. The Japan Metal Bulletin of June 9, 1973, reports that in this fiscal year. 306,000 tons of high-carbon ferrochrome would be produced. 5 The Japan Metal Bulletin, July 19, 1973. rochrome increased over 30 percent in the Japanese market during 1973. U.S. METALLURGICAL INDUSTRY CONSUMPTION OF FERROCHROMIUM Gross Weight, Short Tons 1971 1972 1973 1968 1969 1970 1974 Low Carbon 152,215 159,267 152,737 127,082 123,107 150,733 172,479 High Carbon 135,830 141,247 117,746 126,111 189,986 259,190 286,549 TOTAL: 288,045 300,514 270,483 253,193 313,093 409,923 459,028 SOURCE: Bureau of Mines Minerals Yearbook, Mineral Industry Surveys. Until recently, every major steel-producing country in the world except the United States had imposed strict export controls on chromium-bearing scrap. Recent action by the Commerce Department to restrict American exports of scrap demonstrates the critical availability problem now facing American steelmakers. Reimposition of the Rhodesian embargo would necessarily convert a serious problem into a crisis. Aside from cutting off over 60 percent of current high carbon ferrochrome imports, U.S. consumers could expect to pay highly inflated prices for the remainder that was available. In 1974 for example, the Rhodesian price of $316/ton for high carbon ferrochrome was 60 percent below the Japanese average and $50/ton below that offered by German and Norwegian producers." Intense pressure on these limited markets cannot help but drive these prices even higher. Cost escalation is serious at any time, but becomes even more so when foreign steel producers, free to evade the embargo as they have done since 1967, are able to procure their raw matrials for as much as 30 percent below the cost to American steelmakers. Although chromium accounts for an average of only 16 percent of stainless steel content, it represents fully 25 percent of the raw materials cost for stainless production. Reimposition of the embargo would give foreign producers an automatic 6 percent cost advantage over American steelmakers, a factor that would likely accelerate in the future. The penetration of foreign specialty steel into the American market would almost inevitably increase. Not only would the resulting economic impact be severe, but Rhodesian chromium would enter this market in the form of stainless steel -as it did during the sanctions period-nullifying the already dubious impact of the sanctions themselves. 56 FT 246: Imports TSUSA Commodity by Country, U.S. Department of Commerce. 57 Bureau of Mines Bull. 261-262. |