The scrap recycling industry is always concerned about the price of scrap metals. Scrap metal companies struggle to make profits when scrap prices fall for a prolonged period. Due to low scrap prices, scrap metal companies are being hammered around the world.
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All-time low scrap prices
2015 was a disastrous year for scrap traders as there was continued price declines across all metals.
BBC reports that scrap steel prices are now half what they were in 2015, according to BBC. Prices of scrap metal in Wales ranged from PS50 to PS60 in August 2015. In contrast, prices for the same scrap metal in the United States were approximately PS100-PS110 in 2014, PS120-PS125 in 2012, and PS140 in 2014. This shows that although 2015 was a harsh year, there has been a downward trend for many years.
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Some scrap prices have dropped more than 70% in the past 12 months. Andrew Jacobson, one owner of All Metal Recycling, Franklin Park, purchases steel scrap at $50 per ton, which is more than 70% less than what he paid a year ago. Jacobson said to CRAIN’s Chicago Business that he believes everyone is looking for a gradual price rise.
The Reasons for the Continued Falling Scrap Prices
There are many reasons for this sudden drop. Great Falls, Montana-based Pacific Stee and Recycling has its headquarters in Great Falls and branches in nine western States. Patrick Kons, vice-president of scrap operations at the company, told the Great Falls Tribune that there are many dynamics involved. These are commodities that can be traded globally at cyclical prices.
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Joe Pickard, chief economist of the Institute of Scrap Recycling Industries, Washington, D.C., explained to CRAIN that “The stomach-wrenching swooning in metal prices was driven by the slowing Chinese economic, a strong dollar which makes exports less competitive, and excess supply of commodities such iron ore, which steelmakers could use instead of reusing the scrap.”
Impacts of falling scrap prices
Many people and firms involved in scrap trading and recycling have left the industry. Some have laid off their staff, while others have started stockpiling scraps in hopes of a market recovery.
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Pacific Steel and Recycling’s Great Falls scrap yard in Montana has seven employees. This is half the amount of employees that the scrap yard had a year ago. A couple of its Lewiston and Williston recycling plants were also shut down by the company.