Unpredictability continues in the ferrous scrap market as prices move in some regions while other merchants report no change. Most merchants MRW spoke to reported an average fall of between £5 and £10 per tonne across the categories during the past month. The rest mostly reported no change, with some small rises in certain areas.
Brexit uncertainty, the falling pound, low availability of materials, increasing freight costs and, in Scotland, the newly introduced ban on cash transactions were all cited as contributing to the general low level of activity in the market.
News that steel products company Liberty House had set up a metal recycling business, and was planning to be recycling five million tonnes of scrap annually in five years’ time through a network of UK processing facilities, was a note of interest in an otherwise slow market.
One merchant in the north-east reported an average price drop of £10 per tonne across the board: “I think it has come down because of a mixture of low demand and the fact that fuel costs are going up.”
Another merchant in the region reported a drop of £5 per tonne ,but said that he was still busy thanks to cleaning out a few big factories. He added that the low value of scrap was sometimes working in his favour.
“Some people are giving the scrap free of charge because it’s not worth the transportation costs,” the merchant said. “It is better than when the prices were up and you had to pay for it.”
Another operator in the area said that there had been no movement in prices: “They haven’t changed recently. Business is really not very good and people are shopping around a lot more now.”
Prices were down at Midlands merchants. One commented that recent price fluctuations were reminiscent of similar market behaviour last year.
“We’ve had two drops of £5 per tonne in the past few weeks,” he said. “It’s what happened last year. We’re now paying £45-£50 for light iron and OA is £80.”
The merchant said that a lack of stability was damaging the market, and another operator had noticed the increasing tendency of potential customers to shop around for prices and move their business accordingly.
“People are shopping around a lot more to make sure they’re getting the best deal, and they keep swapping. You could be losing customers over £5 per tonne,” the merchant said. “Non-ferrous is doing better so some people are concentrating on that.”
In Scotland the market was inconsistent, with increases, falls and no change all reported by merchants to MRW. But most were experiencing at least some impact from the recently introduced ban on cash transactions for scrap.
“Prices have gone down £10 per tonne in the last week,” reported one operator. “Door trade has dropped off a bit since the cash ban. We have a lot of account customers so it’s not too bad overall.”
Another said that prices in the area had not made any significant changes in the past few months.
“The market has been fairly stagnant which I think is due to the volatility of the pound,” the merchant said. “The cash ban has affected trade a little bit and people are apprehensive about it. Local householders are turning up and don’t have enough ID – after loading up the car they ask if they can leave it for free because it’s not worth them going back to get the ID.”
A merchant in the north-west also reported inconsistency in prices: “It’s a mixed bag – some categories are up, some down and some stayed the same. Light iron is £50 and OA is £100.”
In the south no change in prices was reported by merchants that MRW spoke to. “Trade is about the same as this time last year,” commented one.
Welsh merchants had seen some falls in scrap prices, but the non-ferrous market was helping to keep one operator’s trade from being too dismal. “Ferrous has gone back down again by £5 per tonne,” he said. “But we are quite busy with the non-ferrous because of the pound. It’s very uncertain times, though.”
Most merchants said they felt unable to predict where prices would go in the coming weeks, largely because they felt the market was dominated by uncertainty. “It will be interesting to see what happens with the US election and what that will do to currencies,” said one trader.
Liberty house joins the market
The development from Liberty House to set up a recycling arm in the UK was generally welcomed by scrap merchants, with some reservations.“It makes sense to set up processing where you are making steel to make sure you can supply what you need,” one Midlands operator told MRW. “But I’m not sure that it will necessarily be good for everybody.”In Wales, a merchant said: “I suppose more competition is good but it might upset some businesses.”“There will be a lot of competition. I think the only way that they’ll be able to make it work is to buy out people,” said a merchant in the north-east.A north-west operator said it could be a challenge to achieve the volumes expected by Liberty: “The only way would be to buy up big yards and they are operated by big companies. It’s good for the scrap business, though, good for the industry.”
And a Midlands businessman commented: “The more people that are doing it, the better. Hopefully, it will increase the quality of scrap and customer service that the industry will be providing.”
MRW spoke to 16 merchants for this report