UK ferrous scrap prices have dropped by as much as £15 per tonne, the first significant movement in the market for several weeks.
Several merchants that MRW spoke to cited factors including low export demand, the holiday season and exchange rates for the fall in ferrous scrap prices over the last few weeks.
Many merchants saw prices drop near the beginning of the July, with others seeing drops throughout the month. Operators reported a fall of anything from £5 to £15, with lighter categories generally seeing bigger drops than heavier materials The average drop for merchants that MRW spoke to was £10 across most UK regions.
One Scottish operator said: “Prices are down around £10. It’s a reaction to export prices going down. Heavier stuff is down less, maybe around £5 per tonne.”
According to some operators, the drop in prices is a result of the sustained sluggishness that the market has been suffering for most of the year. Merchants said that there were no signs that reported improvements in the national economy are filtering down to the scrap trade.
One North East merchant said: “There’s still a big shortage of scrap. It’s the state of the economy. There’s no work, no demolition, and not much building.”
A couple of merchants said that although prices had fluctuated, July finished much the same as the previous month.
“Prices did drop a bit, between £5 and £10 but it’s bounced back again,” said a merchant in the North East.
However, despite some regional and local variations, most merchants are reporting that trade in general is sluggish. One merchant told MRW that the current state of the market was a symptom of the more general decline in the ferrous scrap market, while another said that they were contemplating the future of their business.
“Trade goes through spells and at the moment we’re going through a rubbish spell and I don’t know if I want to carry on until it gets better,” said one operator.
One South East merchant said that the recent introduction of new licensing regimes was still causing problems especially for traders dealing with more than one local authority area requiring multiple licences.
Some merchants said that the drop in prices was typical of the time of year and were expecting further decreases. “Around £10 came off prices at the start of the month and we’re hearing that it will go down again next month,” said one merchant. “Europeans are shutting down in August for the holidays and the exchange rate isn’t great.”
A Welsh merchant also expected further price drops. “Trade is very slow, it’s holiday time. Prices are going down next month I’ve heard.”
Another merchant agreed that a drop of around £10 per tonne was typical of the time of the year but did not expect any further changes until September.
“It’s quiet with low prices,” said a merchant in the South East. “It’s like this every year and won’t change until the end of August and the end of the holidays.”
Another in the North West also put the trading climate down to the time of year: “Trade is slow. Ramadan has also affected business. Prices might move again in September.”
According to the Bureau of International Recycling’s (BIR) World Mirror quarterly report on ferrous metals, scrap demand is growing in most countries worldwide.
However without sings of stronger demand from China, India and Turkey, scrap markets will remain in only a “semi-healthy condition” for months or even years ahead, according to Christian Rubach of TSR Recycling and president of the BIR Ferrous Division.
“All our industry can do until the ‘Golden Years’ return is to concentrate on reducing market overcapacity step by step, to work on its image as a first-class raw materials supplier, and to be ambitious regarding quality and standards,” he said.
- MRW spoke to 14 merchants for this report