Scrap merchants have warned that the collapse of a major steelmaker in the south-east will make them more dependent on volatile export markets.
Kent-based Thamesteel went into administration on 25 January, with 50 of its 400 employees kept on by administrators Mazers while it seeks a buyer.
One major merchant in the region told MRW the firm represented a “significant” market in the south-east, buying about 50,000 tonnes of scrap a month.
“They are going to be sorely missed because that 50,000 tonnes has got to go somewhere else.”
He said the collapse would mean scrap traders would be more reliant on the export market.
“I don’t think with the way the market is generally, there’s enough demand to take up the surplus. Which is why we’re starting to see the prices come off. The sentiment of the market was low anyway with lower prices and this hasn’t helped.”
Another merchant said Thamesteel stopped buying scrap in November but merchants were hoping they would come back into the market in the New Year.
“It’s tight enough as it is now selling steel. Export prices have come off recently. And without a home market to go to, it closes the door so [firms abroad] can buy it cheaper.”
He added: “It takes another player out of the market and allows buyers to keep prices down; and it leaves us dependent on the export market.”
“If you’re a small merchant selling 500 or 1,000 tonnes a month to Thamesteel, and now they’ve come out of the market, you’ve now either got to load it and export it yourself, or find other markets, where there might not be as much mark-up in it.”
Gary Eastwood, director of London and Kent Metals, said the biggest regret was the loss of jobs. He said his firm had had a “very long relationship” with Thamesteel and would be happy if a buyer was found so he could continue to trade with it.
But like many UK merchants, the firm was now heavily reliant on the export market.
Eastwood said higher prices paid for material by buyers in Asia and elsewhere meant the market was difficult for UK steelworks.
Ian Hetherington, director-general of the British Metals Recycling Association, said the collapse exposed the “imbalance between the volume of supply of recycled metal over domestic demand”.
Hetherington added: “It is desperately sad to lose more UK jobs and steel production capacity. Thamesteel has been a valued customer for our members.”
Kent Council said it would lead a taskforce to help “secure the future of the steelworks and the wider economy”.
Kevin Lynes, cabinet member for economic development, said the taskforce would “discuss the next steps, including how we support the workers”.