Dive Brief:
- Scrap metals, like light gauge steel, copper, aluminum and brass, have dropped 65% in value since late 2014, and many who once sold these materials are stockpiling them, hoping for a market turnaround. As a result, Great Falls, MT-based Pacific Steel and Recycling and some other companies have seen a 50% to 55% reduction in what comes their way, said Pacific Vice President of Scrap Operations Patrick Kons.
- Pacific’s Great Falls scrap yard is down to seven employees, a 50% reduction in a couple of years, due to the economic downturn. The company also closed a combination steel and recycling plant in Lewiston and a new steel facility in Williston, ND to save money. Local town officials suspect residents are parking junked vehicles on streets and piling defunct appliances in their yards because it’s too expensive to transport them to recycling plants.
- Steve Moltzan, owner of a Great Falls company that sells auto parts, said auto bodies are at their lowest cost in his 32 years in the salvage business. But Kons thinks the trend is cyclical and that better days are ahead.
Dive Insight:
China’s flailing economy and drop in scrap metal import, a stronger U.S. dollar deterring export, and overproduction of new ore have all influenced the current trend. Scrap metal exports from the U.S. dropped 4.7% in the first half of 2015 compared to the first half of 2014, according to statistics gathered and summarized by the Journal of Commerce. Recyclers and those who sell commodities are feeling the squeeze.
However, Kons anticipates a turnaround.
“It took 14 months for prices to fall so much, and it might take that much time or longer for them to come back. But each supplier has a price point where its yards fill up, and they need to sell. We want to stress that our recycling scrap yard is open and ready to serve them," he said to the Great Falls Tribune. "There are a lot of dynamics involved. These are global commodities with cyclical prices."
