Some merchants are expecting further reductions in prices in the run-up to Christmas as the decline in the ferrous scrap market continues. Most merchants MRW spoke to reported prices drops in October, the latest in a series of similar moves, along with slow trade.
The ferrous division of the Bureau of International Recycling has said current ferrous scrap values are down to the low price of Chinese exports of steel billet, while announcements of more job cuts at UK steel mills has highlighted the extent of the challenge facing the steel industry and its supply chain.
Some merchants felt that prices might roll over for November without much change, but others were preparing for further falls, as MRW went to press. Predictions were also mixed about whether a typical pre-Christmas boost in trade, when businesses and individuals cash in material for some extra seasonal spending money, was likely to happen this year.
One merchant in the north-east said that prices had dropped significantly in October.
“For light iron, we’re paying around £20-£25, heavy is £40 and mixed is £30,” the operator said. “But trade has been terribly slow. I can’t remember the last time a plumber came in with his stuff. Next month, there is only one way it can go and that’s down, especially with the end of the year approaching.”
Another merchant in the region said that customers were only just coming to terms with the reality of low prices.
“It’s got to the stage now where you are not in much of a hurry to pick up material,” he said. “Every time you go to pay someone, you have to be prepared for an argument. There are still people turning up with a microwave and bicycle in the back of their van thinking that they’re going to get £50 for it.
“We are paying for scrap but we don’t even know what we’re going to get for it.”
A similar experience was reported by operators in the north-west. One merchant said he was no longer paying for light iron. But the business was relatively busy, the merchant added, despite low prices.
“Our clients are busy,” he said. “The phone has been ringing too, and I think people have been sitting on material for a while in the hope that prices will go up. But now they are thinking ‘it is what it is’ and are letting it go.”
He echoed a sentiment expressed by several businesses that MRW spoke to about the uncertainty of the market: “Our concern now is who we are selling material to and how we are going to get paid. Everybody’s under pressure. I can’t see what the Government can do as it’s a global problem.”
Another north-west operator reported a £10 drop in prices in October and was paying £20 for light iron and £45 for heavy iron, although he remarked that “it was probably £145 this time last year”.
In Wales, merchants reported very quiet trade with a scarcity of material, although one expected a small spike in activity before Christmas.
Scottish merchants that MRW contacted also reported slow trade. One said that prices had gone down around £10 in October and another fall was expected this month: “We haven’t been getting much of any scrap lately and business is very quiet.”
One trader commented that he had “nothing positive” to say about the ferrous scrap business, while another said that while they were paying around £60 for heavy scrap, this was significantly less than 12 months previously.
“We were probably paying around double this time last year,” the merchant said. “People are really surprised by the prices, especially if they don’t come in on a regular basis. They are only just now becoming aware of the severity of the price drops. I think there will be another reduction before Christmas.”
A merchant in the Midlands reported that some parts of the business and client base were busy, as companies and factories were taking advantage of cheap imports. But door trade had completely fallen away, along with prices, which were down between £15 and £20 per tonne across the categories. Light iron was fetching “£15 to £20 per tonne, if we pay anything at all”, while heavy OA grade was worth £50-£60.
“I think there will be another fall coming as well, probably another £10 off – you always get a drop before Christmas,” the merchant said.
“With the closures up north, that’s 4,000 or 6,000 tonnes coming on to an already saturated market.”
Another operator, who reported a £10 fall in prices in October, described trade as “desperate”.
“There is no door trade – who is going to come out for £20 a tonne? It’s going to get slower before Christmas and I think a lot of yards will just take a longer break over the period. There’s no point paying people to come in and sweep up.”
Prices had also gone down in the south, although one merchant said his business had been preparing for larger drops: “People were talking about a free tip for light iron but it’s not there yet. We’re paying £10 for it. The difference is that, in the past, if the price went down, you could still sell material but now the problem is, if I buy it, can I actually sell it?”
MRW spoke to 14 merchants for this report