Editor's Letter - Upping the Ante

Las Vegas appears to be the appropriate place for the 2008 Institute of Scrap Recycling Industries Inc. (ISRI) Convention & Exhibition, as scrap processors and traders are involved in what is currently a high-stakes industry.

The majority of secondary commodities have continued to trade at the high end or above and beyond their historic trading ranges in the first quarter of 2008, helping to define the high stakes from one perspective.

Fluctuating commodity prices are not new to veteran recyclers, but even many veterans have become wary of "letting it ride" (that is, holding on to inventory) in the current pricing climate.

In addition to bigger jackpots at stake, deal-making has also been an intriguing aspect of the recycling industry during the second half of this decade.

Much like 10 years ago, the word "consolidation" is being used to describe increasingly large mergers and pending mergers between both recyclers and basic materials companies related to the industry.

The scrap industry consolidation of the 1990s did not necessarily match the expectations of the truest believers, who envisioned a handful of coast-to-coast companies emerging.

However, the latest deals have created several companies with operations not only spanning one continent, but with a presence on two or more continents.

Should the announced merger of Sims and Metal Management be finalized, it will create a company with operations throughout the English-speaking world and with facilities in major cities and at major seaports in several nations.

Two other high-profile deals—the Steel Dynamics Inc. acquisition of OmniSource and the Nucor acquisition of David J. Joseph Co. (DJJ)—indicate a vertical acquisition pattern that shows steelmakers tipping their hands about future supply concerns.

The recent global deal-making aspects of the industry are evident in several places in this edition of Recycling Today, including a list of the 20 Largest Multi-National Scrap Recyclers, a report on recent consolidation activity in the nonferrous metals industry and a feature on the Nucor acquisition of DJJ.

Deal-making is nothing new to the scrap industry—in fact it is an element as essential as iron, aluminum or copper. But in a global economy that is consuming resources more quickly than ever before and generating more secondary commodities than ever before, the amount of deal-making seems to have crossed a new threshold.

With as many as 5,000 scrap industry processors, traders, consumers and suppliers expected to gather April 6-10 for the ISRI Convention & Exhibition, there is every reason to believe that more deals will be struck, and perhaps some major ones will be announced, when the industry gathers in Las Vegas.