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The Ups And Downs Of Scrap Steel

Posted on 14 February 2017

Like all market driven metals, scrap steel prices also have ups and downs, based on the supply and demand dynamics of the day, and of course, worldwide influences. At some times, the overall cost of collecting, processing and distributing scrap steel is greater than its value – it’s simply not worthwhile. At the same time, market forces work in the complete other direction, and make the value of scrap steel worth the investment. The thing is, ferrous metal recovery, processing, and recycling is capital-intensive and it affects the entire supply chain from end to end.

For those who keep a close on eye on worldwide trends, China is definitely a watch point. Since China dominates global steel production, their production activity will always affect world supply and have a consequent affect on the need and demand for scrap steel. This is just one example of how interdependent the entire world market has become. Indeed, sluggish economies, in Canada and the United States, also impact the scrap steel market, in this case negatively. To a great extent it’s about a middle class that is purchasing less, consuming less, and wasting less.

On the horizon, however, there may be glimpses of change, particularly because both Canada and the U.S. seem to be trending towards infrastructure spending – in other words, massive projects to build roads, bridges and aging substructures. Whatever the market influences, the big players in steel recycling are constantly forecasting and strategizing when it comes to the buying/selling of scrap steel (or for that matter any scrap metal). This is where instant access to metal prices and metal market helps collectors and processors to make the most astute decisions.

As it is, scrap metal pricing is as important to the small-scale collector as it is to larger companies that deal in very high volumes. And while scrap steel (and various alloys) is readily available on a consistent basis, it’s the demand for scrap steel that may not be so consistent. Here again, those supply and demand stimuli dictate buy and sell pricing. In this type of business environment it’s wise to closely monitor prices, with a view to get the best possible price. This applies equally to a small recycling operation that might depend greatly on end-of-life appliances and such.

The truth is, scrap steel can be very efficiently processed and re-manufactured into raw material that is just as viable as virgin ore. In fact, scrap steel overcomes the many negative consequences of metal mining and processing. There is far less polluting of the environment. There is much less consumption of energy. And there is less dependency on mining. Indeed, recovery and recycling of steel also ensures that less waste is going to landfill, which in itself is costly and wasteful. Scrap steel simply makes good economic sense, just as long as worldwide drivers will allow.

Today, with forward-looking national initiatives being launched in the U.S. and Canada, economic turnarounds may well have some positive effects on the scrap steel market.

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