Ferrous Department

DOUBLE DOSE OF COMMODITY WOES

During the recent woes of the ferrous scrap market, one of the common reassurances being offered was that at least most U.S. generators of prompt scrap were performing well, thus keeping volume steady.

Unfortunately, this truism cannot be uniformly applied.

A processor in the Midwest notes that his two primary prompt scrap suppliers are in the agricultural equipment market. Right along with metallic commodities, agricultural commodities such as corn and soybeans have plummeted in price around the globe. So North American farmers fighting to stay afloat are not in the mood to buy new combines and tractors that cost thousands of dollars.

“Combines and tractors are not selling,” notes the processor. “There was a four-week shutdown at John Deere and there have been layoffs and shutdowns at Case Corp.” He also notes that a nearby scrap-consuming John Deere foundry “has bought very little since October.”

Like most observers, he sees little reason to believe that depressed commodity prices—agricultural or metallic—will rise back up swiftly in 1999. “We’re looking for 1999 to be weak; I’m hoping to break even. As bad as the steel industry is, the agricultural industry is right behind it.”

Even after a slight uptick in prices, across-the-scale street traffic is still suffering as peddlers remain disinterested in prices that are far below what they became accustomed to in 1997 and early 1998. A processor in the Great Lakes region notes that many of his street trade customers “are seeing $55 a ton go down to $30 or $25 per ton. It gets to a point where they say it’s not worth it for them.”