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Market report - ferrous 5 July 2014

Merchants across the UK are experiencing a continuing run of stable trading with most reporting no real movement in prices for several weeks.

Overall, trading is still quiet, although there are some pockets of local activity. But the strong pound, low demand and availability, combined with a traditionally lower level of activity during the summer for some merchants, is contributing to a subdued market.

One merchant in the North East said: “We’ve not seen any movement. Business is very quiet. There’s the odd one of two [merchants] saying that it’s good but you don’t know if you can believe them.”

Another in the South does not expect any change in the near term.

“There’s hasn’t really been any movement since April,” the merchant said. “I don’t think we’ll see any increase for a few months. It’s always the same at this time of year. But trade is OK and we’re busy enough.”

However a few merchants reported price movements. One operator in the North West said prices were down, but said this was a reflection of more general trends in the economic market.

“We’ve been told a drop of £5 to £10 for export,” the merchant said. “I’m hearing it’s due to unrest in the Middle East and the fact that the pound is getting stronger. The rupee is very weak and India isn’t buying UK material.”

“A lot of people feel the job [scrap metal] is coming off the boil, but I think that’s commodities in general.”

Another operator in the North West also reported a similar drop in prices with expectations of more to come.

“Prices are down about £5 a tonne across the board in the last week,” the merchant said. “We’re hearing it’s because of the strong pound and lack of orders. There’s the feeling that it may come down another £5 this month. Trade is very slow.”

In Scotland, trade was subdued but more predictable. “There haven’t been any changes in prices since Easter,” said one merchant. “But business is more stable. There are fewer peaks and troughs and more continuity.”

For most, trade is stable but continues to be slow. One North East operator said: “There are a lot [of merchants] still buying work. You look at the prices and you can’t afford to do it.”

However, some are experiencing stronger levels of trade. One Welsh operator said that although prices had not increased, business was good. “Everybody was worried about how the cash ban would affect business but we’ve got more customers now than we had before the ban,” the merchant said.

Another North East merchant was typical of several who were relying on upcoming local jobs to keep the business ticking over for the rest of the summer.

“There’s not much material around - we’ve not much left now but we’ve got some factory strip outs at the end of July and the beginning of August so that should see us though for a bit,” the merchant said.

Most merchants were typically unable to predict future prices although several said they did not expect any significant changes until the autumn due to a slacking off of operations during the summer.

However one larger operator predicted that prices could come down by up to £10 per tonne across the board in the next week or so.

In other news, British Transport Police’s Metal Theft Task Force searched more than 100 scrap metal dealers and made 75 arrests in a recent ‘Week of Action’ to clamp down on metal theft.

The next operation, which will be another week-long action, will take place in mid-July.

British Metals Recycling Association (BMRA) has elected Shane Mellor as its new president and Graeme Carus as his deputy. Mellor is managing director of Mellor Metals and has been in the industry for 38 years. He initially became involved with the BMRA with the implementation of the end-of-life vehicle directive, and served as legislative policy chairman.

Speaking of his new role, Mellor said: “After a year of change, a lot of work still lies ahead for the BMRA and I hope to serve the interests of members well during my time as president by promoting the sector.”

His new deputy, Graeme Carus, is director of business development at EMR where his responsibilities also include public and regulatory affairs, marketing, communications, producer responsibility and environmental consultancy.

Carus said: “I’m looking forward to working with Shane to encourage the Government and others to recognise that we cannot increase recycling without supporting those that actively carry out the task. This is something that is all the more important given the challenging economic times our industry is faced with.”

BMRA director general, Ian Hetherington saidd: “Now that the Scrap Metal Dealers’ Act has come into force, the BMRA will concentrate on making sure the legislation is robustly enforced by the authorities with adequate resources. However, the greatest challenge in 2014 and beyond is finding a way for the industry to successfully communicate its genuine value to the society that we serve.

“Recycling is widely supported by society and public policy, but unfortunately, few people want to live alongside the facilities that make it happen. This challenge needs to be resolved by the industry, political leaders and society in general, and soon.”

MRW spoke to 13 merchants for this report

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