Merchants found themselves perplexed by an increasingly unpredictable ferrous market as prices dropped by up to £20 per tonne at the start of October. The falls came only a few weeks after a move of a similar amount in the opposite direction.
September’s increases had boosted morale in the trade following a lacklustre year. However mills were set to settle at around £20 lower as MRW went to press, making any boost from the recent price increase likely to be short lived.
Some merchants in the North East saw ferrous prices fall by £10 per tonne at the beginning of the month, while others were expecting drops of between £15 and £20. However, most operators were at a loss to explain October’s drop in prices. One Midlands operator said they had given up trying to understand the movements of the market.
“Why have the prices moved? You tell me, I haven’t got a clue, there doesn’t seem to be any rule, except that it’s quiet,” he said.
But despite most merchants reporting an average drop of £10 to £15 across the different categories, there were pockets where the fall in the market had not reached or where it had not impacted as dramatically. One merchant in the South had not seen prices drop as much as other regions, although they acknowledged that there had been a trend downwards in the last couple of weeks.
They said: “It’s a bit quiet. There’s not much scrap about. Prices are a bit lower than last month.
Another merchant in the South said that most ferrous categories had not changed much but they acknowledged that prices of scrap cars had dropped.
In Scotland, one merchant said that the market had not changed much for several weeks. “There’s not really been a price drop from our point of view,” said one operator. “There’s hasn’t been anything for the last two months. Trade is not too bad and about level with what it was this time last year.”
A Welsh operator reported a £10 per tonne drop but said that trade was “not too bad and ticking over”.
Merchants working further from away from larger scrap dealers or ports have spent the year dealing with small margins, and any further drop in prices means they are almost completely eaten away.
One rural merchant said the drop meant they were now paying only £50 per tonne for light iron, once the cost of transporting it was factored in. “The price of diesel means that there is hardly any profit in ferrous at the moment,” the operator said. “Business is slow but non-ferrous is a little better so I can’t grumble too much.”
In Scotland, one operator said that prices had fluctuated a little in recent weeks but business was holding up. “It’s been a bit more volatile since the referendum but there’s been no significant movement and trade is consistent,” the merchant noted.
Most merchants across the UK were unwilling to offer opinions on what the market would do over the next few weeks, with several exasperated at the increasing unpredictability in the sector.
One merchant in Wales, which reported a price dip of around £5 per tonne, said they did not expect much price movement in the coming weeks. “There’s no talk of prices going back up either,” the merchant said. “I’ve got a feeling the mills have fulfilled their orders and we’ll just go through the next month without any more changes.”
“Trade has picked up a little bit but it hasn’t got back to the levels that it used to be.”
MRW spoke to 11 merchants for this report.