The price of ferrous scrap metal has taken a nosedive after a period of sustained higher prices, Materials Recycling World (MRW) reports. The publication gives the reasons for the sudden drop as the continuing Covid lockdowns in China, the war in Ukraine, and a lack of demand from overseas.
However, part of the reason is that prices have been running at an artificially high level, in response to pent up demand after the lockdown restrictions were eased. This meant that a fall was inevitable, and it is not necessarily a sign of long term decline in the market.
MRW spoke to a number of ferrous scrap merchants. One told the publication: “Prices have been at record highs and it’s just not sustainable. Now you have a mixture of summer shutdowns, Chinese lockdowns and the war in Ukraine that are probably combining to affect the market.”
He added: “I think this is a blip, though, because underlying demand is still there and I reckon things will rebound in the autumn.”
There seemed to be a mixed picture with regards to the outlook for the future. A merchant based in the north east said that ferrous scrap prices had fallen by £40 to £50 within a month, but didn’t believe they would fall much further.
Another merchant said: “The price of ferrous scrap has come down around £30 to £40 per tonne on average, I would say. I’m not really sure why but I suppose prices have been good for a while and had to come down some time. I think they will drop again. When prices go up, they go up slowly but, when the fall, they tend to come down with a bang.”
The wider market is feeling the effects of soaring inflation, and the ongoing issues with the supply chain logistics, which are reducing demand and causing projects to be delayed.
Ferrous scrap means scrap metal which contains iron. This could be in the form of products, including vehicles, ships, and rail coaches, as well as machinery and construction beams and reinforcement bars, which have reached the end of their lifecycle. The metals are re-melted down and used to make new products.
Because iron and steel tends to be consistently valuable and useful, there is a long-established ferrous scrap recycling industry, unlike many other materials recycling sectors, which have only got underway in the past few decades due to concerns about sustainability and the environment.
There are three types of ferrous scrap. Home scrap refers to the by-products of new steel production in steel plants and foundries. This kind of scrap is not re-sold but generally returned straight to the furnace to be re-melted.
New scrap is the leftovers from the manufacturing of new steel products, and is generally sold into the scrap metal industry for recycling. Old scrap is generated by industrial or consumer goods which are no longer useful, such as vehicles, cans, and even buildings and bridges. It requires processing before it can be re-melted.
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