Ferrous

No Time to Worry

Ferrous scrap pricing that has been this lofty for this long could reasonably be considered a source of worry for many in the trade, who know that what goes up must come down.

But as 2006 begins, most ferrous scrap processors find themselves eager to keep buying and selling scrap (ferrous as well as high-priced copper and aluminum) and say they don’t see the signs that might point to a rapid fall.

"I’m pretty positive about next year," says one Texas scrap recycler. "If there is any winter downside to the market, I don’t think it will last more than 60 days," he adds.

A source of concern remains whether the obsolete scrap reservoir has been tapped to the point that even high scale prices will not be enough to provide adequate flow. "I think we’ve cleaned up a lot of the ranches and rural areas," remarks the Texan. "It could make for a tight market."

A recycler in New England began speculating nearly a year ago that the early round of high pricing had resulted in the harvest of easy-to-spot old machinery stored outdoors in rural sites and on vacant land in urban areas.

A recycler in Tennessee believes an increasing number of scrap suppliers are more informed about the market and its monthly price changes, meaning during months when scale pricing has fallen off, they are holding onto material for the full 30 days. "There is so much information out there that there is a slowdown in off-the-street traffic, even from peddlers, right after pricing is brought down," he remarks. "It really is the Information Age."

Recyclers report, though, that auto bodies and appliances are still streaming in, as the consumer economy is healthy.

Demolition scrap also remains a healthy source of ferrous grades, though a rugged winter could also affect this segment in areas of the country. Contractors are as conscientious as they have ever been to mine every pound of metal from job sites. "It is an additional reward to the way we do business," says one California demolition contractor.

The Texas recycler says he is seeing some independent cleanup and hauling contractors, as well as truck drivers, come back to his part of the state after having headed to the Gulf Coast to find work. He says that many of them have told him their experiences there were not good ones.

"We ran out of trucks to ship scrap for awhile, but now they’re all coming back—and many of them were not paid for what they did down there," the recycler comments. "One worked for 60 days and never received a check, and his story is not unique."

(Additional news about ferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)