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MARKETS: Ferrous 7 September 2013

Recent weeks have provided mixed experiences for ferrous scrap merchants across the UK. Most report slow trade and quiet yards in what is traditionally a slow month in the holiday month season for many.

Although August was predicted to be a “rollover” month in terms of price movements, merchants in most regions report price increases of between £5 and £10 as the month progressed, although there is uncertainty as to what is driving this.

One merchant in the south said: “Prices went up a couple of weeks ago, but trade is non existent. It’s the holiday period. I’m going on my holiday next week and hope that things are better when I get back.”

However another operator reported a steady stream of business: “Prices have been going up around £10 a tonne we’re paying £110 for light iron. August has been quite busy, there’s been demand because there’s work going on around this area. Hopefully next month [September] will be the same.”

The most optimism came from one merchant in Wales who said August had been “a really good month”, boosted by competitive prices and advertising.

North-east operators that MRW spoke to reported trade in fits and starts only: “Prices are stable but there’s very little stuff about. There’s a major recession on and the politicians don’t know what to do about it.”

However not all operators are having the same experience, and some are perplexed by business patterns and finding it difficult to read the market.

“It used to be easy to predict August, being a holiday month but this time it hasn’t been,” one Midlands merchant said. “We’ve been reasonably busy. Trying to find homes for all the scrap is the hard part.”

He added: “But if you’re paying more for scrap, I don’t think you can be getting the margin because it won’t sell. The foundries aren’t having the price rises.  I don’t think they are really genuine price rises reflecting the market.”

Price increases were seen by several as an attempt to drum up trade and increase activity in the market rather than as a result of increasing demand and more general upturn of the market.

“There’s been nothing happening this month, it’s been very quiet,” said one operator in the north-west. “Prices are up in places between £5 and £10 to try and get more into the yard during the holiday, but overall it’s quiet.”

Uncertainty about what would happen in the next few weeks was expressed by all the merchants MRW spoke to.

In Scotland, merchants have also seen modest prices rises along with scarce scarp and slow trade, making is difficult to tell whether or not better prices are a reflection of the healthier market.

One merchant said: “There’s been a bit of a price move but nothing drastic. We’re up £5 a tonne for a client, whether that’s because of the market or the client needed it and there’s not much about I don’t know.”

Whatever the attitudes to the future of the market, there are still opportunities in the wider sector for some operators. EMR has emerged as preferred bidder for much of Sita UK’s metals operations, including sites at Boreham, Coventry, Lenwade, Norwich and Sheffield.

Sita has reviewed its metals’ recycling operations in the wake of difficult trading conditions.

The firm was unable to comment on the future of the sites at North Tyneside and Hayes, which were included in the consultation process.

Meanwhile Tata Steel’s operation in Port Talbot in Wales has been credited with helping provide a 25% increase in profits in the group’s European operation in the three months to June.

The company said there “encouraging signs” of improving economic conditions in the UK and that it was “poised to capitalise”.

Also, the Local Government Association (LGA) was set to release Scrap Metal Dealers Act guidance for local authorities as MRW went to press[check]. It will follow the Home Office fees guidance which was issued last month.

The LGA’s draft guidance says that councils need to agree what fees they will charge applicants for a licence under the Act as soon as possible.

Registered scrap metal dealers now have until 15 October to apply for a temporary licence.

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