This week MRW spoke to 11 businesses to produce this report.
As yards get ready for the Christmas break merchants are thinking ahead to what the next year will bring for the industry and no-one is agreed on whether any recovery will be visible. Rumour has it that the price of scrap will continue to rise in-line with export prices but traders worry that too much of a rise will mean further squeezing of already tight margins. There is a real air of caution, however, as merchants remain ready for any price drops. Many firms are turning their talents to other parts of the industry in addition to scrap in order to stay competitive and in business.
It seems all merchants are talking about the possibility of a further price rise, although it is felt this will only be temporary. Some firms report very low activity in 2009 against 2008s figures and it is felt that things have to get better in 2010 than they currently are or more firms will go out of business.
Other firms have reported success in bringing in material by boosting awareness through advertising campaigns.
Most yards report very slow trading and minimum levels of activity over weigh bridges. Prices continue at higher levels, although some merchants are unsure about which way the prices are going to go. The wise sages predict a short-term hike and then prices will fall, while the entrepreneurs among us predict a good start to the New Year. Demolition contractors seem to be busy with, more encouragingly, looking to start jobs in the New Year - all in all a very difficult one to call.
Traders are perplexed as to why prices might rise in January and are speculating over whether it is to do with the lack of scrap or increased export activity.
One trader said: I doubt there will be much scrap for the first six months of 2010. We have bought in new machinery to add extra value to our material and we have other ideas too.
Another spoke of the obstacles firms are facing. He said: Margins have to get wider in order to cover all the costs and its getting incredibly difficult to meet the overheads at the moment. It just feels awful at the moment though, its such a confusing picture and it looks as though it wont get better for another 12-18 months.
A lot of yards are shutting on Friday 18 December as Yorkshire grinds to a halt. The next year will be very trying for home markets, although as a positive, the export market will always be ready to take material markets. The biggest worry for traders at the moment seems to be cash flow because at the moment it can take 120 days to get the money through from a delivery. Merchants are therefore not looking forward to returning after the Christmas break.
Things seemed a little more optimistic in the south, as the steelworks may have ordered more material or are about to in the new year. According to one trader they will either have to do this or face closure. Another reported that the export market has been climbing adding another £5 on material, as India entered the market and even the US bought some shipments although this seems to be politically motivated.
Local steelworks prices are still holding firm or moving up, and several reports also indicate dockside prices edging slightly higher. In a few cases, the areas two main steelworks are now paying between £165 and £170 per tonne delivered for O/A. But with the two largest exporters/direct suppliers offering as much as £165 collected (say about £175 delivered) for the same grade, home steelworks prices may be falling behind export prices. Yard intakes remain low, and with the prospect of all steelworks starting with low stockpiles in January, some sources see the above as an indication of higher prices when melting re-starts in 2010.
Unusually, and despite imminent holiday shutdowns in the areas main markets of Spain and Turkey, export prospects seem to be improving. Dockside prices are, if anything, slightly better than last week and all the major players are looking for more tonnage. On balance, it now looks as if January prices may improve, but this is unfortunately limited to sales. At the moment, demolition arisings, yard intakes and factory collections remain abysmal, and no improvement is expected in the near future.
MRW ferrous guide prices (£)
Broken foundry cast iron 95-105
Foundry short steel 110-120
Grade OA heavy structural and plate 115-125
Grade 1 old steel (number 1 5ft) 110-115
Grade 2 old steel (number 2 2ft) 95-105
Grade 4C new production steel bales 110-123
Grade 5C loose light steel scrap 90-100
Grade 6B loose incinerated scrap (destructor) 5-15
Grade 7B mixed steel turnings 80-95
Grade 8B mixed steel cuttings 100-110
Grade 9 heavy cast iron (oversize) 100-110
Grade 10 light cast iron 105-113
Grade 11 cast iron borings 105-115
Grade 12 A new production heavy steel scrap 110-120
Car and lorry engines 124-130