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Market Focus: Ferrous metals

Ferrous Metals 2000

The New Year started much like the last year ended for most ferrous merchants around the UK, as prices remained static and trade was slow.

Most merchants that MRW spoketo said that prices had remained unchanged for the past month and that 2016 had got off to a slow start. Although not confirmed as MRW went to press, most merchants expected that prices would remain as they were during January.

Several merchants were pleased that some stability in prices was characterising the market, but this was small consolation for the fact that trade in the run-up to Christmas was slow and that January had started little better.

One north-east merchant said: “The start of the year has been horrible, and there was no-one coming in before Christmas either. We are paying £20 for light iron and maybe heavy is £40 or £50. Trade is not the way it used to be and I think those days are over.”

In the Midlands, the situation was similar, with one merchant saying that the year had started off worse than last and this could be the trend for the rest of 2016.

“It isn’t usually this quiet and it is definitely quieter than last year,” the merchant said. “Prices have stayed the same, but I’ve heard no word about January. I hope they stay the same to get some stability in the market.

“Factories seem to have cut back on production. What we are hearing about China and the stock market there makes me think we could potentially have more price falls this year.”

“Some people are still offering crazy prices for material, but that’s because they’ve got orders to fill. When that stops and everyone is back to normal, it distorts the prices.”

Another Midlands merchant who reported no movement in prices blamed the slow economy and low prices for the stagnant ferrous market.

“There isn’t any material about – everyone is just treading water,” said the merchant. “The prices are so low that it’s not worth people picking up material and bringing it in if I’m not going to give them much. They’ve already spent that on diesel.

“Especially with light iron – it’s so bulky you need loads of it to make it worthwhile. Then if it’s not worth them collecting it, people are stuck with it and it gets dumped. It’s a vicious circle.

“There is nothing happening in the economy, and it’s hard to have any confidence when all you hear in the news is doom and gloom.”

Another had given up trying to predict the market: “The start of the year has been very slow. Prices are low but there was no change in December. It’s hard to say what will happen in the beginning of this year as there don’t seem to be any rules any more.”

A trader in the north-west reported a better start to the year than most but was still cautious about 2016.

“We’ve had a busy start to the year,” he said, “but I don’t think that there is much sign of things being better this year. But you’ve got to make the best of it and, as long as prices don’t start going down again, we should be all right.”

There was a similar sentiment in the south, where prices had not moved in December or since the start of the year, according to businesses contacted by MRW.

“Prices went down at the end of November but they haven’t changed since,” one merchant said. “We are still quite busy so it’s not all doom and gloom.”

Others felt the market had reached rock bottom and, while not predicting an upturn, they were at least hoping for stability.

“We are paying £25 to £30 for light iron, heavy unprocessed is £40 and processed £70,” said one trader. “I think the market has reached the bottom, but I think the only thing that might shift things back up is if there is a reduction in the billet coming out of China. Otherwise this year will probably be the same as last year.”

In Scotland the situation was similar. One merchant described trade as “awful” and was fearful that business would not improve in the short term.

“Prices haven’t gone down any more but I don’t think that’s even possible,” said one merchant. “Commercial trade is very quiet and door trade is practically non-existent. I’ve heard that this malaise could last a further 18 months. Globally, who is doing well?”

In Wales things were no different with merchants reporting little trade. “People call up and, when they hear the price, they just leave it,” said one merchant. “It’s usually quiet this time of

the year because people like to leave it until the weather gets a bit better.”

Another said: “My VAT is down half of what it was this time last year. The Government should do something because it is losing out too. We are just a small company, so imagine what they’re losing on the bigger firms?”

MRW spoke to 15 merchants for this report

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