Ferrous

Ferrous scrap dealers have been happy to see a more margin-friendly price to work with in the past few months. The difficulty, however, is finding enough material to take advantage of the friendly price climate.

The run-up in prices has helped draw out more obsolete material, including flattened autos, white goods and farm scrap. This has kept shredder operators busier and helped decrease inventories at scrap facilities whose operators were waiting for a $100 or higher per ton price level.

But on the down side, it is widely agreed that this price boom is a result of demand from China, which means there has not been an accompanying increase in generation of premium-grade industrial scrap in the U.S.

Shredding autos may help fill orders, but most recyclers contend the profit margins that help make their companies profitable derive from handling the stampings, clips and turnings generated industrially.

Recyclers are hopeful—but by no means convinced—that a satisfactory conclusion to the war in Iraq could bring some new confidence to the U.S. economy.

If so, that confidence may have to come from household consumers and work its way through the manufacturing chain. Right now, recyclers are surveying a scrap-generating scene that they say is crowded with companies with no immediate plans to increase production.

With the auto and appliance industries projecting lackluster years (compared to the 1997-2000 boom), the outlook for increased scrap generation—as well as domestic demand—seems dim in the near-term.

Chinese demand appears to be giving the market a reason to look for scrap. But whether there is enough to be found remains the prevailing problem.

Scrap dealers are scrambling to keep the industrial accounts they have while also keeping their ears open for any new manufacturing activity that might make an appearance in their regions.