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Market Focus: Ferrous metals

2000 Ferrous metals

Ferrous scrap prices have risen a little in recent weeks for most merchants across the UK, but many feel that the market is still very uncertain.

Price increases of between £5 and £20 per tonne were reported throughout March, depending on the region. But most merchants said that material was scarce and the upwards movements in price had failed to create a noticeable improvement in trade.

Some businesses were buoyed by the recent price increases, albeit small ones, with a hope that they could signal an improving market. But this was tempered by a combination of months of unpredictability in the market and uncertainty about the future of Tata Steel’s Port Talbot plant and the industry as a whole, as MRW went to press.

One trader in the north-east said that prices had gone up £10 per tonne on average in March but expected the increase to be short-lived: “We’re paying £40 for light iron and between £70 and £80 for heavy. But trade is in fits and starts.”

Another reported a £5 increase but said trade was slow.

A merchant in Wales said there had been a couple of small increases recently, up around £10 in total. “But it has not really brought in any more people or any more material,” he said.

The story was similar in the Midlands, with operators reporting price increases of between £5 and £10.

“Gate trade has been slow this year,” one merchant said. “The increase in prices has probably helped a bit and brought a few more people out of the woodwork.” Another reported two small increases in March but did not anticipate any more price movements in the coming weeks.

“Everyone’s being a bit wary,” he said. “I think after the first price increase people were still cautious and it didn’t really do anything for business. So they have risen again. It has brought some people in very slowly. I don’t think it will change again.

“April is usually a busy month, so you can’t really tell, but if May is good, then we might have a good year.”

In general, operators across the UK said they were glad to see a couple of price increases in the market in recent weeks. One company said it was paying £15-£20 for light iron, the same as the previous month, and taking a small increase in margin to help pay for transportation and other costs.

Prices for April had yet to be confirmed as MRW went to press. Predictions of price movement were mixed, with some merchants feeling that they would go no further for the time being while others expected a further rise in the coming weeks.

One merchant in Scotland was seeing the benefit of export prices moving up, but said that trade still fell short of previous years despite being reasonably busy. Another was also unwilling to get their hopes up too much. “We’ve heard that prices are going up for April,” the merchant said. “Trade is slightly better and the increase in prices should improve business a little, but you don’t really know until it happens.”

Another operator was a little more optimistic despite describing trade as “atrocious” compared with this time last year. He added: “There is a glimmer of hope, there seems to be a little bit of a buzz around, but people are still very cautious.”

One north-west merchant said he was now paying a little more for better grades but business was still quiet.

“The higher prices haven’t really brought in more people,” the trader said. “They have been spoilt with bigger prices in recent years and they think it might go up a bit more. There still isn’t any material about. I don’t really know what’s going to happen this month.”

Another merchant in the region was feeling a little more optimistic than at the beginning of the year, but was still apprehensive.

“Prices are up £10 a tonne in the past couple of weeks and it has been quite busy,” he said. “I’m not sure it is bringing in more material, but business certainly feels better and is going in the right direction. I think April will stay on the same level.”

Merchants in the south reported price increases of between £10 and £20 in recent weeks, with varying effects on the level of gate trade.

“Gate trade is still very poor,” said one. “We have had a few more through the door recently but nothing to get excited about. I don’t know what will happen this month but I’d like to think prices will go up.”

Another had experienced a small upturn in trade, but was still unwilling to be too optimistic.

“Prices are up around £20 this month,” he said. “It seems like the market is picking up a bit. But there is no more material about and people aren’t coming in. It is quiet – this year hasn’t really started.”

  • MRW spoke to 15 merchants for this report

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