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Market Focus: Ferrous metals July 2015

Some ferrous scrap merchants are ex­- periencing reduced prices this month, while others are anticipating them, as low demand, scarcity of material and low prices continues to keep the ferrous trade subdued.

Although there were regional variations, most merchants that MRW spoke to reported at least some downward movement in June. As MRW went to press, some were seeing price falls at the beginning of July and several expected to be hit in the coming week or so.

One merchant in Wales reported a fall of £10 per tonne at the beginning of the month, while a north-east operator reported two consecutive falls of £5 in the first week of July.

“There is no output and demand - at this price people might just hang on to it,” the merchant said.

Another trader was expecting steel prices to drop by £20 for July.

These price movements follow reported falls of up to £10 per tonne for several merchants in June. Those hoping for a busy June before the typical slowdown in later summer were disappointed. One merchant in the north-east said: “Trade is very quiet, non-existent really. We’re paying £70 per tonne for light iron.”

Another business in the region had a similar experience. “Trade is in fits and starts - it’s definitely not steady and, overall, it is quiet,” the merchant said. “There’s nothing on the horizon to say that it is going to get any better.”

In the south, several merchants reported prices drops during the past few weeks, while in Scotland scrap merchants reported steady but slow trade.

One merchant said: “We are getting a lot of phone calls for prices but, when they hear them, they often don’t seem that interested.”

In Wales, one operator commented: “It is pretty quiet but steady, but not like it was before the downturn. Non-ferrous has also gone down a bit.”

In the Midlands, one merchant reported small erratic prices movements through June: “It has been very quiet for a while with no sign of anything improving.”

One merchant summed up the opinion of several others about the causes of the slow state of the market.

“Gate trade is very quiet,” he said. “We are still busy from our factory collections, but gate trade is down about 50%. It’s a combination of low prices, not much material about and not being able to pay cash.”

Some merchants were frustrated that any economic recovery had yet to mani­fest itself in their industry and related sectors. A Midlands trader said he had given up trying to predict the market and there was no more ‘normal’.

“The Midlands is supposed to be the epicentre of a manufacturing resurgence, but I don’t see it,” he said. “Before the crash, you could have said we are having a bit of a downturn at the moment, but things have not improved since. Many companies went to the wall and they haven’t been replaced, so all those state-of-the-art machines got scrapped or sold abroad.

“I can’t see business getting back to levels before the crash, but we should at least be moving forward.”

A merchant in the north-east expressed similar sentiments: “No-one is producing anything so there is no demand. The only industry that is doing anything at the moment is the car industry.”

Some operators said the state of the ferrous scrap sector meant that margins for customers and firms was getting tighter and tighter.

One said: “I wouldn’t want to pay more than £80 per tonne for light iron. But these days it is often not worth someone bringing it in. They have to get it to me, then they have to tell me their life story and bring all this ID, and then I give them a cheque for £15 or something - it’s not worth their while any more.

“For me, there’s all this red tape, so my time is spent with that instead of on the business.”

Several merchants that MRW spoke to said they were expecting more price falls and were not anticipating any upturn in the market during the coming weeks.

“I haven’t heard anything definite but I think that [July] prices will go down again and I don’t think trade will be any better this time next month either,” an operator in the north-east said.

A merchant in the north-west also said he thought there could be a further decreases in July and that the export market was quiet.

Some merchants had expected trade to be better in the run-up to the summer holidays but were left disappointed, and most feared that there was little chance of any improvement in trade before the autumn.

“We keep plodding away, but this time of year you should be extremely busy before everything shuts down at the end of July and August,” commented one operator.

MRW spoke to 17 merchants for this report

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