Ferrous News

The current slump, however, is noteworthy because it is being accompanied by a very noticeable halt in scrap demand. A scrap buyer on the West Coast says his supervisor has told him he may soon have to tell some industrial accounts the company will not be offering any pick up service for the time being.

For this California company, weak demand and thin margins are not the only reason for such a strategy. Operating hours for some processing equipment are being restricted by local governments due to the energy crisis in that state. “We can only process for a handful of hours at night,” the buyer says of conditions at one facility.

With scale pricing slowing peddler traffic, industrial accounts have been close to the sole source of ferrous scrap for many processors. Even this source has been less dynamic in the last couple months, as many factories have slowed their production for seasonal reasons or to meet declining sales forecasts.

It can be considered an unhappy commentary on the expectations of steel mills and iron foundries if they are not ordering enough scrap to use up the reduced amount being collected.

Not all dealers are finding scrap destinations to be so restricted. “We’re not having trouble shipping scrap,” says one Texas dealer. “We’re able to move what we can, we’d just like to move more of it,” he says. Pricing remains discouraging, he adds, and mill melting capacity rates reflect the comparative lack of demand.

“Our mills are not any better off than those in other parts of the country,” he says. “They’re reducing melting capacity, and there seems to be an oversupply of scrap as they try to work through their inventory, and not enough sales on the new steel side.”