This year is so far is failing to provide any relief for merchants plagued by the decline in the ferrous scrap market in recent months, as prices continued to fall in the opening weeks.
Across most of the UK, operators reported a fall in prices throughout January of up to £15 per tonne. The impact of price drops in Scotland and the south was less consistent, but slow trade was still the typical experience for most -merchants.
Although January is generally a difficult time of the year, most merchants said recent weeks had seen less trade than the same period last year and on average, prices were lower.
One Midlands operator reported that prices had dropped by £10 per tonne and they were now paying £100 per tonne for shearings and £55 per tonne for light iron, the latter significantly down on this time last year.
Another merchant in the Midlands had seen prices drop £20 and was now offering £55 per tonne for light iron.
In the north-east, one merchant reported price rises and falls throughout recent weeks culminating in an average £10 reduction.
“We’re starting to get work in now that we’ve priced in November and it’s worth less than we quoted,” the merchant said. “People don’t believe it when you tell them the prices now.”
In Wales one business was paying £40 per tonne for light iron. “It’s always changing,” the merchant said. “You buy it one day but you’ve got no idea how much it will be the next day.”
Continuing a current trend, merchants in the south of England seemed to have more mixed fortunes.
One said there had been no drop in ferrous prices: “Trade hasn’t been too bad, we’re spending money.”
However, another in the region said prices dipped at the beginning of the month and again at the end of January leaving them down by £20 on average per tonne since the end of last year.
Price drops had not affected Scotland as much as other parts of the UK as MRW went to press, although one -merchant was expecting them to hit soon.
“We don’t know how much, but we’ve been notified that price drops are likely,” said one operator. “Business is slow at any rate.”
One merchant MRW spoke to felt there had been an increase in the number of yards selling up, having recently visited auctions for the selling off of machinery.
Another believed the recent clampdown by the metal theft task force had had a detrimental effect on a lot of smaller operators.
“A scrap wagon always gets pulled up and drivers are getting on-the-spot fines for the smallest things, sometimes £200,” one operator complained.
There were predictions that times would only get tougher for some scrap merchants.
“The only customers we have held on to are the ones we’ve had for 20 or 30 years, everyone else is just chasing the last 50p on price,” said the operator.
“During the recession people had money set aside which they could use to get through it. But now a lot of them will have spent it and things haven’t got any better.”
Some merchants were at least grateful for the small mercy of reduced -transport costs following a drop in price of fuel.
Most operators reported that it had reduced their overheads. However, many said it was a small advantage that did not make up for the fall in the price of ferrous scrap.
“We use gas oil in the yard and that’s come down and it’s better than a year ago and that would be good if the prices were up a bit, but as it is, it only has a small impact overall,” said a north-east operator.
One merchant in Scotland, who had seen prices fall between £10 and £15, said: “The fuel price drops will be helping somewhere on the bottom line but it’s hard to say if it’s really making much of a difference.”
Another Scottish merchant said prices had only come down a little, but like many operators MRW spoke to, they had given up trying to predict the market.
“You never know how January is going to be but it’s been OK,” said the operator. “There’s a lot of uncertainty about oil prices and what’s happening in Greece. There’s a lot of instability so I don’t know what’s going to happen next month.”
A merchant in the north-west expressed a similar sentiment.
“It’s slower than it was last January, we’ve got some enquiries but not a lot of customers” they said. “With all the turmoil in the world it’s probably going to get worse.”
Other merchants had also heard rumours of further drops, and one told MRW they were expecting steel mills to drop prices by another £10 per tonne this month.
- MRW spoke to 13 merchants for this report