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Where is the scrap metal market headed to?

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by - 11/5/2008 13164 Views

Slowing Demand, Surplus stocks have moved the scrap metal rates southwards..

One would have never expected the current market price to fall to $ 280-330 range in the begining of 2008. Heavy demand for steel had skyrocketed the rates of scrap metal in 2007. It had almost doubled and practically there was no scrap available for export as the local demand of most of the developing countries could not be met.

All of a sudden the tables were turned and the metal prices fell sharply from Jan 2008 and nosedived to half or even less than that to the current levels. There is an abundant stock of steel in the foundaries and more ironore than ever. The credit crunch has directly affected the real estate sector as there is no liquidity in the system for new projects or to complete the existing ones. Small and medium real estae companies and builders are left with no option but to stop their work until they get the funds from Banks. Fuelling to this, most of the governments have hiked the interest rates from 1-3% gobbling the profits of the builders.

Real estate rates have comedown for example a Square feet which was sold at 6000 INR in the start of this year is available for 3900-4200 INR but no takers. All these indicates that the stell sector has tough times ahead.

Next to realestate comes the Automobile sector which utilize a large quantity of steel. The Auto industry was hit hard by the surge in Oil prices which skyrocketted to $148 per barrel in mid 2008. Big players like GM, Tata Motors, Chrysler are having a hard time to cope up with the sales and profits. The low steel rates and decreasing oil prices are a big relief to the industry but the overall gloomy economy does make their lives hard.

Considering the above situations, we can expect the prices to go down a little more in the 220-240$ range before it bounce back. If I were you I will not stock the scrap in my yard..


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About Guna

C.G.Nadar works for recycleinme.com for the past 6 years and he provides support to members. He is involved in various associations of the scrap Industry and is researching the current market trends. .... more info


there is hope

weve seen a sudden drop in scap metal prices particularly HMS in kenya mainly because of the recent ban of steel and copper scrap export by the goverment based on their shallow argument that there is theft of telkom kenyas cable wires.This has made the local smelters drop the prices to cash in on the ban,which is affecting the dealers.