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Economic Recession Results in Severe Impact on Scrap Metal Industry

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by - 5/6/2009 18135 Views

Metal Industry, the worst hit sector of recession

scrap-metal-price.jpgIt is an undeniable fact that the scrap metal industry is going through a lean phase worldwide. Not only steel but also other metals like aluminum are affected by this down turn. The recyclers and sellers of scrap metal are feeling the heat.

Till about a year back the metal recyclers in Tulsa used to pay 85 cents per pound to the sellers for aluminum cans. But this year the price has been slashed by more than 50 percent. The executive director of MET in Tulsa, Michael Patton blames the decrease in the rate of scrap metal on the recession. He feels that the scrap metal industry is going through one of the worst times in the history.

The slump in construction sector has made the demand for metal go down. Even two years back the scenario in Tulsa was quite the opposite. Patton told in a statement to Tulsa World that all over USA the rate of construction has taken a nose dive. A huge amount of copper, steel and aluminum is required in the construction of commercial establishments and home. However, with the decrease in demand in the construction industry, the demand for these metals is at an all time low.

In fact the last few months have seen an oscillation in the price of some metals like aluminum. In the first three months of the year the price had dropped to 15 cents per punt but now it has slightly increased to 25 cents. This trend, as per experts like Patton is not necessarily a bad thing as it might compel the manufacturers to devise new ways to use the cans. In general a cast-off aluminum can be recycled in a new and usable can within 60 days. 

However a news outlet named American Recycler is upbeat about the future trends. It admits that the scrap metal market is in problem but the future may be different. Some of the industry veterans are of the opinion that the prices hit rock bottom in January and now the situation is gradually improving. The metal recyclers are keeping their fingers crossed and they have taken a wait and watch policy.

Apart from the severe economic meltdown, extreme weather might also be responsible for the compounded deficit in certain parts of the nation. The scrap metal industry is also replete with the controversy of “Buy American” provision. The bill was passed in January and it would restrict foreign iron and steel from the projects that come under the $819 billion recovery package. However it is not yet clear how this bill would impact the scrap metal industry.

The industry heads have expressed their belief that the scrap metal sector will recover, its shaky condition notwithstanding. They assume that the huge foreign and domestic bailouts will start showing their impact in the next quarter. Once the economy recovers the rate of buying among the consumers will improve. This will create more job opportunities.

Bruce Savage, the Institute of Scrap Recycling Industries VP said that he is cautiously optimistic about the prospect of the scrap metal industry. The timing of the rebound is the most important factor according to him.

Category : Metal

Tags : Metal Scrap,

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