ScrapyardPRO BLOG

EnvironmentMetals TheftSafetyRecycling IndustryRunning a Scrap Yard more
X

Steel Production Still Rising

Steel production rose again in September, both in the US and abroad.

At 74.8 million net tons, domestic raw steel production was 3.8% higher than a year ago for the year-to-date through Oct. 28, according to American Iron and Steel Institute statistics. Capability utilization was at 74.6% compared with 72.2% a year ago.

World crude steel production increased 5.6% to 141.4 million tonnes (Mt) in September from the same period in 2016, the World Steel Association (worldsteel) reported. Production also rose by 5.6% through the first nine months of 2017, reaching 1,266.9 Mt globally.

Strong production in China contributed to the overall increases. China’s production increased 5.3% to 71.8 Mt in September and 6.3% to 638.7 Mt for the first nine months.

The US produced 8.6% more, 6.7 Mt in total, of crude steel in September than it did last year. US production was up 3.1%, to 61.5 Mt for the first nine months, according to worldsteel.

Regionally, for the first nine months, crude steel production increased by:

  • 2.0% in Oceania;
  • 3.5% in North America;
  • 4.1% in the European Union;
  • 5.9% in Asia;
  • 8.0% in South America;
  • 13.5% in Other Europe countries;
  • 13.8% in Africa; and
  • 14.2% in the Middle East.

Steel production was flat (0.0 percent) in the Commonwealth of Independent States (CIS).

Capacity utilization among the 66 countries that report to worldsteel was 73.5% in September, which was 2.8 percentage points higher than a year ago and 0.6 percentage points more than in August.


Photo courtesy of worldsteel


10/31/2017

Nickel Prices Fluctuating

See full chart
The steady increase in global demand for stainless steel scrap has not been reflected in the price of nickel.

Given that nickel is used in making stainless steel, an overabundance of the former being mined in Asia has affected its price.

The price of nickel was great in early December 2016, fetching $11,675 per metric ton at its peak. At the beginning of 2017 however, the prices were strong but had declined to $9,375 by the end of January. The price continued to decline until around early July. Prices rose until early September before dropping again. The price stood at $11,665 as of Oct. 17.

Why has the price fluctuated so much?

At the ISRI2017 convention in New Orleans in April, Joe Pickard who is the chief economist and director of commodities at ISRI spoke about the flows of nickel and stainless steel.

The flow of nickel closely correlates to the price of nickel, Pickard said. The more that nickel flows, the better the prices are. Recent price drops stem from China’s decrease in scrap imports. China’s share of the global import market for stainless steel has dropped to 6% but it still has a major influence on the industry and price.

Historically China imported large amounts of stainless steel scrap from the US. But it has recently started getting more of its materials through nearby countries in Asia or from mines that produce nickel. The overabundance of nickel has led to China choosing to produce new over recycling old.

On top of that, China is also importing more nickel pig iron from Indonesia and the Philippines. The acting secretary of the Department of Environment and Natural Resources in the Philippines, Regina Lopez, had been holding China back.

Lopez had ordered 28 of the 41 mining companies in the Philippines to shut down earlier in the year due to alleged violations of environmental regulations. When her confirmation to become the official secretary got rejected, the price of nickel dropped right after.

The price of nickel has rebounded despite the increased production from mines.

As far as stainless scrap goes, market leaders have a somewhat optimistic outlook given that the demand for stainless scrap is high. They say that the US market is still aggressive but will face some major challenges through the rest of 2017.


10/27/2017

Nonferrous Exports Surging

See full chart
Exports of nonferrous scrap have boomed this year.

Nickel, copper, and aluminum have been particularly strong.

Nickel exports were 31% higher through the first eight months of 2017 than in the same period a year ago. The nickel waste exported totaled $80.5 million through August of this year compared to $61.4 million in 2016. A majority of the nickel was exported to Canada and went through the Buffalo customs district.

Copper exports surged by 20% through August. A total of $1.74 billion was exported in 2017 compared to $1.45 billion in 2016. The largest importer of copper was China, which accounted for $1.053 billion. This amount was 21% higher than the same period in 2016.

Aluminum exports also rose over the first eight months of 2017, increasing by 16% from a year ago. Exports increased by $190 million, from $1.20 billion in 2016 to $1.39 billion in 2017. China also was the largest receiver of the imported aluminum with a total value of $724.7 million. This accounted for more than half of the total US shipments.







10/27/2017

Flooding Impacts Auto Market

Automotive recyclers and salvage yards may be deluged by vehicles damaged by the hurricanes that have hit southern states in recent months.

Massive flooding in Houston and surrounding areas hit by Hurricane Harvey caused widespread damage to vehicles.

Cox Automotive estimates that 300,000 to 500,000 cars were damaged, according to a Steel Market Update report on hurricanes’ effects on auto scrap markets. Some vehicles will be repaired while others will be salvaged.

Both repaired and scrapped vehicles impact the salvage yard market. Typically when a vehicle is repaired, recycled parts will be used when a brand new part is not needed. The percentage of recycled parts used increases as vehicles age. For instance, a 4-6-year-old car being repaired uses 59% non-OE parts, including recycled ones.

Cox Automotive estimates that 20 percent of the damaged vehicles will be repaired and that the others will be replaced. This means that around 20 percent of the vehicles will require some recycled parts and that 80 percent of vehicles will be up for auction for salvage yards, which could remove all useable useful parts.

The automotive industry as a whole is expected to take a hit due to the massive number of damaged vehicles that were either at dealerships or warehouses. This means that the people who have damaged cars now also have a tough time getting a new car because the local car dealerships are often impacted the same. The effect will be particularly acute given that Texas is the nation’s second-largest market.

However, it is projected that the industry will end up with positive growth due to the massive number of vehicles that will need to be purchased or repaired. Texans account for 9 percent of the vehicles sold retail in the U.S, according to a Detroit News article on how the auto industry feels Harvey’s impact. They also account for 14 percent of full-size pickup sales.

One Houston-based dealership experienced 700 calls over a few days from people who needed to bring their damaged vehicles in for repair. The automotive industry will likely see a similar boom that happened after Hurricane Sandy hit the Northeast. Car sales spiked 49 percent in the month after Sandy. That surge lasted two months.

Repairs and replacements could continue to drive the industry in fast-growing Houston, which is one of the nation’s largest home-building markets.


09/29/2017

Hurricanes Disrupt Scrap Supply

The bigger the disaster, the bigger its effects on the scrap industry.

When homes are destroyed, buildings damaged and automobiles wrecked, massive amounts of materials are extracted and the demand for rebuilding supplies surges. Typically, the demand for materials exceeds the supply extracted from the damaged areas.

The U.S. scrap industry has been greatly impacted in recent months as two major hurricanes have hit southern states. Hurricane Harvey hit Texas and surrounding states. Then Hurricane Irma struck Florida and Georgia.

The extensive damage wrought by the hurricanes caused large shifts in supply and demand for materials, like previous storms have done. But the economic impact of the storms was compounded by where they hit.

Hurricane Harvey was particularly powerful in Houston, whose port handled roughly 68% of Gulf Coast container traffic in 2016, according to MetalMiner. Since January 2017, 40% of iron and steel pipe and tube imports had come into the Port of Houston. Container ships were diverted and trade was effected when the port was closed during the storm.

Also, because it struck Houston, in addition to its impact on logistics Hurricane Harvey had an outsized effect on the rebuilding process, which usually drives the scrap economy after a disaster. Typically, when a major storm hits a highly populated area the first grades of scrap to come out are light iron and shreddables, scrap dealers stated in an S&P Global Platt’s article on the storm’s impact on steel scrap. Then come automobiles, non-ferrous grade scrap, and heavy steel.

Despite the large volume of resources that are extracted from the storm, there is still a deficit.  More materials are needed to rebuild than are being extracted from the damage. This combined with the fact that Houston has been the largest market for newly constructed homes means that the demand for materials will surge once rebuilding begins.

Scrap prices were already projected to be bullish in October. With increasing demand due to the large amount of materials that will be needed for rebuilding , the impact of the recent hurricanes should support these projections.


09/29/2017

Plan Ahead for a Hurricane

Preparing a scrapyard for a hurricane should begin well before the winds start whipping.

Creating, reviewing and revising an emergency response plan prior to storm season provides the optimal protection.

In planning ahead, you can react sooner and avoid potentially disastrous oversights when a storm threatens. For example, knowing how you will secure equipment before a storm hits and communicate with employees afterward so that they know when it is safe to return will help you better protect your business and your people.

“The time to plan is always before,” said Terry Cirone, vice president of safety for the Institute of Scrap Recycling Industries. “So, if you could be in the path of a storm get out that plan, dust it off and review it.”

Cirone advises recycling centers to be particularly proactive in preparing their communication plans, controlling mold, and protecting their records. “It’s all about business continuity and protecting your assets.”

Some businesses recently impacted by Hurricane Harvey failed to protect their files from water damage, she said. “If they get so flooded out or water-logged that you can’t utilize them, then that’s a problem.”

With Hurricane Irma’s arrival imminent and additional storms looming, Cirone urged businesses to prepare early and act quickly to stay safe.

Here are some suggested steps.

  • Review responsibilities for preparations and response with everyone, including senior management.

  • Establish processes for storm-related communication between employees and managers, such as how to announce when the business will close and re-open as well as how employees can report that they cannot make it to work. Update all related phone numbers.

  • Secure equipment or materials that could be sent flying by strong winds.

  • Shut down electrical equipment that could be exposed to flooding.

  • Remove low-lying files and other property that could be damaged by high waters.

  • Check for mold caused by flooding. Hire experts to treat affected areas like walls and carpets if needed to protect the health of your employees and customers.

See ISRI’s Safety Tips for Hurricane and Flooding Cleanup and Recovery Work for additional information.

 

09/08/2017

China Scrap Ban Looms

China intends to ban certain scrap from being imported, citing environmental concerns.

Recycling industry leaders expect more bans to follow.

The impact of restrictions could be significant for US recyclers because China is the largest receiver of exported scrap commodities.

Scrap organizations are on edge.

On July 18, the Institute of Scrap Recycling Industries stated:

“More than 155,000 direct jobs are supported by the U.S. industry’s export activities, earning an average wage of almost $76,000 and contributing more than $3 billion to federal, state, and local taxes. A ban on imports of scrap commodities into China would be catastrophic to the recycling industry.”

To date, China has told the World Trade Organization that it plans to ban the import of certain scrap materials by the end of 2017, including unsorted mixed paper, most scrap plastics, metal slags, and drosses. Scrap paper accounted for $1.9 billion of the more than $5.6 in scrap commodities that were exported from the United States to China in 2016. Scrap plastics comprised $495 million.

The restrictions that have been announced so far will impact scrap paper more than plastics due to China having already cut back on its import of scrap plastics over the past few years. The exact impact on the US scrap industry is still uncertain but some possibilities or prediction have been made, according to a Waste Dive report on China’s scrap ban surprise.

The US tends to export its scrap because of the lack of technology to optimize sorting and extracting. Without the ability to just send the banned products overseas, companies will have to push for better technology to optimize their extraction levels. Or, companies could choose not to become more efficient. If that were to occur, consumers could be less likely to recycle because prices could drop due to excessive supply of scrap materials that can’t be exported .

In having to adjust and determine where all of the banned scrap will now go, the US may work towards making better use of its scrap. This may be done through using scrap to produce more products or, as  mentioned previously, by finding better ways to extract as much of the resource as possible.

Using recycled materials for production of goods is often cheaper than creating the material new. This mindset could align with the Trump Administration and its plans to bring manufacturing jobs back to the US. There already have been efforts to start improving the efficiency of recycling and scrapping through the use of technology. This is accomplished by producing machines and processes that allow for more of a material to be extracted from scrap.

One of the worries about the restrictions that China is initiating is that other scrap may be banned as well. This was confirmed shortly after China released the details on its ban on plastics, mixed paper, and other materials.

China has mentioned that it also plans on banning wire, motors, and some bulk metal scrap in 2018, Reuters reported. One of the wires that will be banned is copper wire. This news sent the price of copper up with an increase of 5% per tonne in some places.

Additional news:

Waste Dive: What comes next after China’s Scrap Ban Surprise?

Reuters: China reviewing copper scrap imports; may call halt in 2018: notice

Institute of Scrap Recycling Industries: ISRI Statement on China's Intent to Ban Certain Scrap Imports

07/27/2017

Using Yard Management Reports to Reduce Risk for Scrapyards

Running a scrap metal business requires a lot of your attention.

Whether you own the recycling center or manage it, you have to know what is happening anywhere at any time.

You have customers to service, sales to make, employees to supervise and laws to follow—just to name a few of your responsibilities. With so much to do, you inevitably must count on others to help.

Review the following scrap yard management reports at the end of each day to spot any problems.

1)      Cash Register Activity. If you are the only person who runs the cash register, then you should know what cash has been added or withdrawn during the day, and why.

Demand the same accountability from your cashiers. Require that they record each transaction they make in a ledger, along with their initials or name. Or, use software to collect and store this information.

From cash taken out to pay for lunch for employees to mid-day deposits when the till is running low, you should be able to account for every transaction, whether it involves a direct purchase of materials or not.

Recording all transactions during the day and reviewing them at the end will show you who has spent money and how. Check your opening balance, calculate your transaction totals and then confirm your closing balance to ensure that you have accounted for all of your money.

Investigate any discrepancies for possible mistakes or misappropriations of funds. 

2)      Purchases. You should pay what you owe—but not a penny more than the ticket price. Tickets show how much you should have spent—but not how much you actually have spent.

Record each transaction in a ledger, including the weight of the material(s) and the amount paid. Require your cashier(s) to do the same. Then cross check those transactions against ticket totals.

Ensure that neither you nor your cashier paid “$8” for a “$6” ticket that was hard to read, for example. Or, that a cashier didn’t pay “$50” when the ticket should have been “$5” because they read the price for a material to be “.50” instead of “.05” when buying 100 pounds. You can also use software to automatically calculate ticket totals and amounts paid.

3)      Canceled Purchases. Record each voided transaction and the reason for canceling. This will help you spot recurring errors. You could also use software to track voided transaction so that you can see if an employee may need training.

If you spot canceled purchases or overpayments that you were not aware of, investigate the reasons and respond accordingly. If it was an honest payment mistake by a long-time, dependable employee, then perhaps you point it out so that they are not likely to repeat it in the future. But if it was theft or incompetence then you may be able to recoup and/or prevent future losses by terminating an employee, and possibly seeking reimbursement.

Running a scrapyard requires you to shift your attention from one stressful situation or pressing problem to another, rapidly and frequently. Don’t miss honest errors or dishonest theft, either of which could be costly.

Review the three reports above each day to minimize risk.

04/28/2017

Steel Production Keeps Increasing

Steel production remains strong domestically and abroad.

Domestic raw steel production was up 4.4 percent for the year-to-date through March 25, according to American Iron and Steel Institute statistics. Capability utilization was at 73.4 percent compared with 71.3 percent a year ago.

World crude steel production increased 4.1 percent to 126.6 million tonnes (Mt) in February from the same period in 2016, the World Steel Association (worldsteel) reported. A 4.6 percent increase in production in China contributed to the overall increase. 

The US produced -1.0 percent less, 6.4 Mt in total, of crude steel in February than it did last year. There were 29 days in February 2016.

Steel production increased by:

  • 24.7 percent in Oceania;
  • 18.2 percent in Africa;
  • 15.8 percent in Other Europe countries;
  • 5.7 percent in the Middle East;
  • 5.1 percent in Asia; and
  • 1.5 percent in South America.

Steel production was flat (0.0 percent) in the Commonwealth of Independent States (CIS) and North America. It decreased by -0.6 percent in the European Union.

Capacity utilization among the 67 countries that report to worldsteel was 70.3 percent in February, which was 4 percentage points higher than a year ago and 1.1 of a percentage point more than in January.

Year-to-date, global steel production was up 5.8 percent through February, worldsteel reported.


Photo courtesy of worldsteel

03/31/2017

Steel Production Starts Strong

Steel production has surged in early 2017.

Domestic raw steel production was up 4.7 percent for the year-to-date through Feb. 25, according to American Iron and Steel Institute statistics. Capacity utilization was at 73.0 percent compared with 70.8 percent a year ago.

World crude steel production increased 7.0 percent to 136.5 million tonnes (Mt) in January from the same period in 2016, the World Steel Association (worldsteel) reported. A 7.4 percent increase in production in China contributed to the sharp rise overall. Researchers attributed the improvement in China largely to the fact that there was a “marked dip” in production in January 2016.

The U.S. produced 6.5 percent more (6.9 MT) of crude steel in January than it did last year.


Steel production increased by:

  • 15.6 percent in Africa;
  • 13.5 percent in the Middle East;
  • 11.6 percent in South America;
  • 11.5 percent in Other Europe countries;
  • 11.4 percent in the Commonwealth of Independent States (CIS);
  • 7.1 percent in Asia;
  • 6.2 percent in Oceania;
  • 4.0 percent in North America; and
  • 2.4 percent in the European Union.


Production did not decrease in any of the regions tracked by worldsteel. Capacity utilization among the 67 countries that report to the organization was 68.5 percent in January, which was 3.4 percentage points higher than a year ago and 0.9 of a percentage point more than in December.


Photo courtesy of worldsteel.

02/28/2017

Steel Market Forecast 2017

The World Steel Association projects that global steel demand will increase by 0.5 percent in 2017 to 1,510  million tonnes (Mt).

Demand increased slightly in 2016 but weakness in investment globally is hampering a stronger recovery, worldsteel noted in its steel market forecast for 2017.

Steel demand is projected to decline by -2.0 percent in China in 2017 but will start a moderate recovery in Brazil after two consecutive years of double-digit contraction, according to worldsteel. The association projects demand to expand by 4.0 percent in emerging and developing (excluding China) economies and by 1.1 percent in developed economies.

In 2016, world crude steel production increased by 0.8 percent to 1,628.5 Mt, worldsteel reported in its most recent steel market update.

Annual steel production increased by:

  • 7.0 percent in the Middle East;
  • 2.1 percent in Australia/New Zealand;
  • 1.6 percent in Asia; and
  • 0.8 percent in the CIS.

Production decreased by:

  • -10.6 percent in South America;
  • -4.4 percent in Africa; and
  • -2.3 percent in the EU.

North American production remained flat from 2015 to 2016 while the US produced -0.3 percent less than in 2015, worldsteel reported. China’s annual output rose by 1.2 percent and its share of world crude steel production increased from 49.4 percent in 2015 to 49.6 percent in 2016.

In December 2016, crude steel production increased by 5.5 percent compared to the previous year. The crude steel capacity utilization ratio of the 66 countries that reported to worldsteel was 68.1 percent in December, 2.8 percentage points higher than in the same period a year ago. The average capacity utilization in 2016 was 69.3 percent compared to 69.7 percent in 2015, according to worldsteel.

Iron ore prices of $80/ton in December were nearly double those of a year earlier, due partially to strong steel demand in China, according to a January 2017 Commodity Markets Outlook from World Bank. “However, prices softened into January, with China’s inventories rising and seasonal demand expected to weaken,” researchers wrote.

World Bank researchers also noted that iron ore exports from Australia and Brazil hit record levels in November and that new low-cost capacity is expected online this year. “These considerations, along with rising scrap supply and an expected slowdown in China’s steel production, are expected to pressure prices downward and force high-cost production to close. Key uncertainties are the strength of steel demand and iron ore production in China,” according to the World Bank report.

Uncertainty related to government measures meant to stabilize China’s decelerating economy will continue to weigh on the steel market, according to a January 2017 Steel Industry Stock Outlook by Zacks Equity Research. “Although the steel industry will remain under pressure for some time, it is certainly expected to grow thereafter on the back of the automotive and construction industries,” Zacks reported.


What is your steel market forecast for 2017? Complete our
Scrap Metal Market Outlook.


Photo courtesy of worldsteel.

01/31/2017

Prepare Your Scrap Yard for 2017

Another year is almost finished.

When it comes to scrap yard management, assessing how you fared this year will help you prepare for 2017.

Despite a post-election uptick, scrap metal prices largely hampered the recycling industry during 2016. Just the fact that you still open your doors every day means you have fared better than the many scrap yards that have closed during depressed market conditions.

But do you know just well you have fared? And, how you expect to improve in 2017?

Robust reporting and proactive planning are essential in scrap yard management. Determining your successes and failures will help you build on the former while avoiding the latter.

Follow these seven scrapyard management tips to finish 2016 strong and start 2017 even stronger.

1) Catch up on your bookkeeping.
Ensure that you have an up-to-date accounting of your revenue and expenses. Knowing how much you’ve taken in and how much you’ve spent will simplify tax season and better position you to make sound decisions during the rest of 2016, according to end-of-year business planning tips from FreshBooks, a provider of online accounting software.

2) Complete your quarterly tasks.
The year may be ending but so is the quarter. And, because of their nature, you can’t have a full year unless you have four quarters so you must close out the last three months of 2016 as you did the preceding three quarters.
Your quarterly accounting tasks should include reviewing quarterly payroll reports and making any necessary payments, as well as computing and paying estimated income tax, according to a small-business accounting checklist from QuickBooks. Your payroll services provider should prepare and file reports but you should verify their accuracy. You also should consult with your accountant on income tax payments, QuickBooks advises.

3) Fulfill your annual accounting responsibilities.
QuickBooks includes four annual accounting tasks in its checklist.
1. Review past-due receivables. Determine whether you can collect receivables that are significantly past due or will send them to a collection agency or write them off as a deduction.
2. Review your inventory. Decide if you will write-down the value of unsold items for a deduction on your year-end taxes. 
3. Complete IRS compensation forms. Fill out an IRS Form W-2 for any employee and a Form 1099 for any independent contractor whom you paid a total of $600 or more during the year. You have until Feb. 1 to mail these annual earnings reports to the people who worked for you. You must file with the IRS by Feb. 28.
4. Approve full-year financial reports and tax returns. When it comes time to file your taxes, review your financials and returns for accuracy.

4) Do year-end tax planning.
FreshBooks suggests that you meet with an account before the year ends so that you can follow any advice that they may have for reducing your tax bill. For example, you may be able to purchase some equipment for your yard that would help defray a larger-than-expected profit.

5) Run management reports.
Even if you did well this year, you will want to do better in 2017. But you can’t plan to improve unless you know how you did.
If you haven’t already, run reports like:

  • Materials bought;
  • Materials sold;
  • Transactions by customer;
  • Equipment inventory; and
  • Customer service time. 

Establish benchmarks with these reports so that you can compare your progress in 2017.

6) Plan for 2017.
Scrapyard management doesn’t figure to be any easier next year but you can be more effective. Strategic planning is crucial for capitalizing on opportunities that have arisen or may develop. Start by clarifying the business you are trying to build, according to tips for year-end strategic planning from Inc. magazine. Write out your vision for what your recycling center will look like three to five years from now. Be specific. Quantify sales and describe it qualitatively with criteria like your marketplace differentiators. Then back out your strategic plan based on your goals.

7) Re-energize.
Starting next year strong will require you to be ready. Recharge your batteries by taking time off. Notify employees and customers well in advance though so that they can plan accordingly. When you return, pour your energy into 2017. 

The past year has been difficult for many scrapyards. However, you can make the most of 2016 by thoroughly and candidly assessing your performance with a comprehensive year-end business review. Then proactively plan to do better in 2017.

Want to learn more about how ScrapyardPRO can help you run year-end reports? Contact us at (888) 552-0401 or request a demonstration.

12/14/2016

Aluminum Overcapacity Targeted

U.S. Sens. Rob Portman (R-OH) and Sherrod Brown (D-OH) have urged the U.S. Trade Representative (USTR) to bring a World Trade Organization (WTO) case against China in an effort to address aluminum overcapacity.

“Exponential growth in China’s aluminum sector, fueled by heavily subsidized, government-directed lending, has had significant implications for the U.S. aluminum industry,” contributing to the loss of 15,000 aluminum production jobs in the past decade, including 1,500 this year alone, the senators wrote to USTR Ambassador Michael Froman on Oct. 21, according to a jointly issued press release.

 “China has unfairly subsidized its aluminum industry – it’s not competing, it’s cheating,” Brown stated in the release. “Enforcing our trade laws will ensure that U.S. aluminum manufacturers, the best in the world, have the opportunity to compete on a level playing field.”

Each year since 2008, China has increased capacity and production beyond what its domestic market demands, prompting a 35 percent drop in global aluminum prices, according to the letter to Froman. “With significant government support, Chinese companies are allowed to operate at losses or otherwise independent from market considerations,” the senators wrote.

A panel of recycling industry representatives addressed concerns about the aluminum market, including the “significant decline in aluminum scrap activity,” at the ISRI Commodities Roundtable 2016 in September, Recycling Today reported in a story about how aluminum struggles with overcapacity.

Panelists shared steps that scrap metal recyclers could take to lessen their exposure to the volatility in the aluminum markets as well as forecasts of market conditions. Though long-term issues remain, aluminum scrap prices could get a short-term boost if inclement weather causes shortages and auto shredders scale back operations as ferrous prices decline, panelists said.


Photo by JAXPORT

10/31/2016

Steel Production Slows in 1st Half

Crude steel production was flat in June and down -1.9 percent in the first six months of 2016, the World Steel Association (worldsteel) reported in its most recent steel production update.

First-half production increased by 0.6 percent in the Commonwealth of Independent States (CIS) but declined by:

  • -0.6 percent in North America;
  • -1.0 percent in Asia;
  • -3.2 percent in the Middle East;
  • -6.1 percent in the European Union (EU); and
  • -13.8 percent in South America.

In June, production increased by 1.4 percent in Asia but declined by:

  • -0.6 percent in the CIS;
  • -1.2 percent in North America;
  • -3.0 percent in the Middle East;
  • -5.3 percent in the EU; and
  • -11.1 percent in South America.

China produced 69.5 million tonnes (Mt) of crude steel in June, 1.7 percent more than a year ago. But its first-half production was down by 1.1 percent.

“The economic environment facing the steel industry continues to be challenging with China’s slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices,” worldsteel Economics Committee Chairman stated in a press release announcing the organization’s Short Range Outlook (2016-2017). “The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector.

Demand will contract in China in 2016 and 2017 but is projected to increase in all other markets next year, according to worldsteel’s projections. Worldsteel has proposed key principles for excess capacity and structural adjustment in the steel sector, including removing barriers to efficient mergers. The association’s members represent approximately 85 percent of the world’s steel production.

What is your steel market forecast? Click here to take our Scrap Market Outlook Survey.

Photo courtesy of worldsteel.

07/29/2016

Scrapyards Project Improvements but Material Prices still a Concern

Recycling center operators project slight increases in scrap metal prices over the coming year.

Ferrous and non-ferrous prices should improve slightly within the next three, six and 12 months, according to respondents to the ScrapyardPRO Scrap Metal Market Outlook.

Respondents continue to worry about the economy and material prices though, and recent reports indicate that their concerns may be justified.

China’s economy, which may be the predominant influencer of scrap prices in today’s global marketplace, grew at its slowest pace (6.9 percent) in 25 years in 2015. “The economy faces relatively big downward pressures,” a Chinese government official said in announcing plans to lay off 1.8 million coal and steel workers, including 500,000 of the latter, at state-owned-enterprises, Reuters reported.

China’s crude steel production decreased by 7.8 percent in January, compared to the same period a year ago, the World Steel Association (worldsteel) reported. Globally, crude steel production declined 7.1 percent in January.

However, reduced output and capacity could help boost scrap metal prices by more closely aligning supply with demand.

What is your forecast for scrap metal prices? Share it with us by completing the ScrapyardPRO Scrap Metal Market Outlook.

02/29/2016

Steel Market Forecast for 2016 Slightly Optimistic

Steel market forecasts for 2016 call for a slight rebound in demand, which could boost depressed scrap metal prices.

Recovery is contingent upon consumption increasing in China, where demand and prices have dropped precipitously.

The World Steel Association (worldsteel) projects global steel demand to increase by 0.7 percent in 2016 after decreasing by 1.7 percent in 2015. “We expect the current headwinds to moderate in 2016 but this is based on a belief that the Chinese economy will stabilize,” World Steel Association Economics Committee Chairman Hans Jürgen Kerkhoff stated, in a release announcing the worldsteel Short Range Outlook 2015-2016.

Crude steel production declined by 3.1 percent in October in China compared to the previous year, mirroring a decrease of 3.1 percent in world crude steel production between the same periods, according to a worldsteel report on October 2015 crude steel production.

Steel prices have decreased by more than 33 percent in China in 2015, reaching a record low of 1,733 Chinese yuan (about $272) on Nov. 18.  “With China producing 800 million tons of steel a year—four times more than any other country has ever produced—the sector is in severe overcapacity of some 400 million tons as construction slows in the world's second largest economy,” CNBC reported in an article on why China steel prices hit record lows.

Scrap metal prices have also plunged. Sims Metal Management cited a 30 percent drop in ferrous prices from mid-September to November in announcing cost-cutting initiatives for North American scrapyards on Nov. 18.

When do you expect scrap prices to increase? And what is your steel market forecast for 2016?

Tell us and we will let you know how your predictions compare to those of other recycling industry professionals. Click here to take our Scrap Market Outlook Survey and request a copy of the results.

 

Photo courtesy of worldsteel.

11/25/2015

Scrapyards Squeeze Spending

If tough times don’t last they certainly linger.

A prolonged slump in scrap prices is prompting recycling centers to scale back or sell—and the pressures are likely to continue.

The total value of U.S. exports of all scrap commodities to China, whose once voracious appetite for commodities has weakened with its slowing economy, declined by 10 percent to $3.1 billion in the first half of 2015, according to an analysis of Census Bureau trade data by the Institute of Scrap Recycling Industries Inc. (ISRI). Export sales to China totaled $3.5 billion in the same period a year ago and $5.5 billion in the first half of 2011, ISRI researchers wrote in a scrap market report released on Aug. 8.

 “The big question is going to be how long this lasts,” said Scott Horne, general counsel and vice president of government relations for ISRI.

“It’s not going to resolve itself very quickly in China. As a result, a lot of people are looking for alternative markets to develop and to grow.”

Recyclers are also restructuring operations.

“A lot of people have cut back on hours or even laid people off,” Horne said. “That’s something our members hate to do because many of them are small businesses that have been around a long time and have a commitment to their labor force.”

Some businesses are selling their yards to other recyclers because plunging scrap prices have made it difficult for them to survive, particularly if they have not had the benefits of learning tough but important lessons from previous downturns, such as not to retain inventory too long or to over leverage.

“You can’t speculate on inventory. That’s dangerous,” Horne said. “There was a philosophy that you could buy low and wait until you could sell high but that strategy was upended in the downturn in the late ‘80s and early ‘90s because banking had become more difficult and it was a challenge for some to get financing.”

Highly leveraged recyclers eventually could not cover their debt payments during that prolonged downturn. Recyclers that entered the industry during more recent boom times may now be having similar challenges.

“A lot of people bought a lot of equipment when the market was so crazy and those who borrowed heavily to do that have felt some strain,” Horne said.

Scrap processing firm Metalico cited debt relief as a benefit of its recent sale to Total Merchant Ltd. for $102 million. Its “strengthened balance sheet will reinvigorate Metalico as a prominent force in its markets and potential acquirer of other scrap operations,” the New Jersey-based operator of scrap metal recycling facilities stated in a press release on Sept. 11.

Savvy recyclers can capitalize on the downturn, like by repairing or replacing equipment that they may not have properly maintained when they were running hard during market peaks.

“If people have socked away some money over the years, then this is a great time to be looking at becoming more efficient,” Horne said. “Anyone buying equipment right now is probably getting a deal.”

Slower markets are also ideal for investing in training and developing talent, Horne said. However, recyclers may be reluctant to spend until conditions improve.

“One can recommend but it’s up to the individual to have a good idea of their staying power and if they can take advantage,” Horne said.

Economists do not expect significant price increases soon, but Horne for one is confident that recovery is inevitable.

“It always seems to come back. If it didn’t come back we would be in a real global mess.  It wouldn’t just be us,” Horne said.

"This is clearly a global marketplace. We're not the only ones suffering."

09/23/2015

Texas Scrap Metal Laws Changing

Texas metal recycling entitites (MREs) will soon have to start issuing transaction cards to pay customers by cash or debit card.

As of Sept. 1, 2015, Texas scrap yards must comply with the provisions of HB 2187, including the requirement that MREs issue cash transaction cards to their customers.

"Unless a seller had been issued a cash transaction card, a recycler is only able to pay for a purchase of regulated material by check, money order or electronic funds transfer," according to the Texas Department of Public Safety. Cards are non-transferable and MREs must keep copies of each application and a copy of each cash transaction card for two years.

DPS has developed the Application for Cash Transaction Card for use by MREs. It has also drafted proposed administrative rules and amendments, with the advice of the Texas Metals Advisory Committee.

Law changes that impact Metal Recycling Entities under Texas HB 2187 and the proposed administrative rules and amendments include the following:

  • Your records must include the amount of the purchase but you do not have to report it to the state.
  • You must keep a copy of: 
    • a) the seller's cash transaction card or approved application for a cash transaction card if you paid in cash; 
    • b) the debit card receipt and the seller's cash transaction card or approved application for a cash transaction card if you paid by debit card; or 
    • c) the check if you paid by check.
  • You can only pay in cash or by debit card if the seller has a valid cash transaction card issued by you or another metal recycling entity.
  • An application for a cash transaction card must include:
    • the applicant's name, address, sex and birth date; 
    • the identification number from their personal identification document;
    • a digital photograph of the applicant at the time of their application;
    • a clear and legible thumbprint of the applicant; and
    • the applicant's signature.
  • A cash transaction card must include:
    • the seller's name and address;
    • a digital photograph of the seller;
    • an identifying number that is unique to the individual card;
    • the card's expiration date, which may not be later than two years from when the card was issued or renewed; and
    • the name of the metal recycling entity issuing the card and their state issued registration number.
  • A cash transaction card must be laminated or made of a rigid plastic or other durable material that will preserve the legibility of the information contained on the card.
  • All information on a cash transaction card must be legible and in English. 

Be ready when the laws change. Request a free compliance checklist for Texas scrap metal laws from ScrapyardPro.

08/13/2015

Set Positive Goals for Safety Programs

Focus on your efforts. Not the results.

That’s the essence of the Occupational Safety and Health Administration’s policy for a Voluntary Protection Program (VPP), under which employers, employees and OSHA collaborate to make a workplace safer.

So, while the beginning of the year is a good time to set safety goals for your scrapyard, do so with caution. Set safety goals based on how to work safer, rather than rewarding employees for not reporting injuries. Otherwise, OSHA may require you to revise your VPP.

In a December newsletter regarding scrapyard safety, the Institute of Scrap Recycling Industries provides potential safety goals that can make your scrapyard safer without running afoul of OSHA’s policies for safety programs.

“We’re trying to get in front of the injuries and to reward them for the things that lead to safety,” said Joe Bateman, a safety outreach manager for ISRI.

Though rewarding employees with gift cards for an injury-free month may sound like a good idea, your money would be better spent rewarding them for such positive habits as wearing personal protective equipment and attending safety training.

In an August 2014 memo, OSHA stated:

“A positive incentive program encourages or rewards workers for reporting injuries, illnesses, near-misses, or hazards; and/or recognizes, rewards, and thereby encourages worker involvement in the safety and health management system.”

Furthermore, it continues:

“When an incentive program discourages worker reporting or, in particularly extreme cases, disciplines workers for reporting injuries or hazards, problems remain concealed, investigations do not take place, nothing is learned or corrected, and workers remain exposed to harm.” 

Though OSHA has been pushing businesses to shift to positive incentive programs for several years now, some scrapyards still haven’t replaced VPP that focused on injuries, often because of a lack of knowledge or resources for doing so.

“When you have a workforce of 35 people you’re not going to hire a full-time safety manager. It falls on you,” Bateman said.

But ISRI is helping to make the industry safer by providing free safety training and education to its members. Learn more about ISRI’s safety outreach program and resources at http://www.isrisafety.org.

01/12/2015

Sluggish Economies Abroad Pressure U.S. Scrap Prices

Declining metals prices are pinching profitability for scrapyards.

Scrap consumers are paying them less but yards are forced to pay their customers more to get them to sell in a deflated market.

“When prices tend to come off there’s less incentive for people to bring materials into the yards because they’ll get less money for it,” said Joe Pickard, economist for the Institute of Scrap Recycling Industries (ISRI).

Metal prices have dropped as overseas demand has softened due to slower economic growth abroad. Export prices have also declined as the U.S. dollar has strengthened in comparison to foreign currencies.

As of Sept. 30, U.S. exports of all scrap commodities had decreased 12 percent year-over-year while the dollar value of imports had increased by 5 percent, according to the Nov. 7 issue of ISRI’s Friday Report, a weekly compilation of economic, commodity and scrap market highlights for the trade group’s members.

“Because there’s more capacity to process materials, people have to bid more to get materials to feed the shredders,” Pickard said. “When the prices you pay rise and the prices you get for selling are softer that cuts into your profitability.”

Processors have added and upgraded shredders in recent years to cut their processing costs. “It’s a race to the bottom of the cost curve,” Pickard said.

With a net gain of 12 installations, the North American shredder market expanded by 4 percent in the past three years, bringing the total to 365 shredders, according to an article in the Sept./Oct. issue of Scrap magazine, an ISRI publication.

Scrap Publisher Kent Kiser wrote in a blog post on ISRI’s website:

Changes in the number, size, type, and geographic location of shredders not only indicate trends in the shredding niche but also can suggest the overall health of the scrap industry. From roughly 2001 to 2010, for example, growth in the installation of large shredders was a sign that processors wanted to shred more scrap that previously was sheared and boost their throughput tonnage to meet higher demand for low-residual frag. In more recent years, the large-shredder trend has slowed, and smaller shredders have gained popularity by allowing operators with modest input tonnage—and more limited financial resources—to enter the shredding fray.” 

Consumption should increase as economies strengthen in the U.S and abroad. “It’s much more of a global marketplace for scrap today,” Pickard said.

Though U.S. policy makers are scaling back monetary stimulus, foreign counterparts like the Bank of Japan and European Central Bank are dialing it up as they seek to jumpstart their economies. Pickard said, “We’re still not firing on all cylinders but compared to other economies we’re doing pretty well.”

Click here to learn how you can use Scrapyard Pro’s customer retention and rewards programs to keep your business growing even in down times.

11/21/2014

Tips to Prevent Metals Theft

Metals theft poses a danger to communities across the country. In recognition of this year’s National Crime Prevention Month (October), Scrapyard Pro offers the following tips for preventing metals theft:


  • To prevent the removal and stripping of air conditioning units of their metal coils, property owners may enclose their unit in a wire cage affixed to the mounting pad.
  • Property owners can also prevent the theft of AC units by padlocking their power disconnect box with a quality disc type padlock. This type of lock makes it difficult, if not impossible to cut the lock quickly with bolt cutters. Home improvement stores offer many brands of these locks for under $20.
  • A commercially available alarm product that monitors refrigerant pressure, line and load voltage is also available to address the theft of AC units.
  • To prevent theft of plumbing pipes and wiring, ensure that all crawl space openings are secured with tamper resistant screws.
  • To protect vacant houses, keep the electric current on, leave certain lights on and make law enforcement officials aware of the building’s status.
  • Locations that have metals stored outside in or out of fenced lots should move the items to storage inside a secured structure.
  • Local law enforcement may assist in patterned attacks through placement of mobile hidden surveillance cameras when analysis of data indicates a likely crime, and permission of property owners is obtained. Even inexpensive trail cams may be used for this purpose if cost is an issue.
  • A new technology that is being employed to allow for identification of stolen wiring is the application of specific identifying markings on wiring insulation, laser etched wiring, and markings of other kinds. Identification is essential in building stronger cases and prosecution.
  • Metals theft is not a victimless crime. It has caused property damage, injury, and even death. Recyclers work closely with law enforcement to prevent this serious crime and to catch thieves.

Scrapyard Pro is a member of the Institute of Scrap Recycling Industries (ISRI), the Voice of the Recycling Industry™. ISRI developed and operates www.ScrapTheftAlert.com, a free web-based alert system that connects law enforcement communities and scrap yard operators in the investigation and prevention of materials theft.


Law enforcement officials can post information about stolen scrap materials or materials that have been stolen by thieves that could be sold for scrap. The reports are turned into alerts that are then broadcast over the Internet to all member scrap yards within a 200 mile radius. ScrapTheftAlert.com has contributed to the recovery of $1.6 million of property by distributing 15,456 alerts among 18,361 active users since 2009.


ISRI also offers law enforcement training involving education on recycling facility operations, state laws, and metals theft identification. Go to StopMetalsTheft.org for additional information from ISRI, including tools for law enforcement, prosecutors and state legislators.



10/22/2014

ISRI Devotes Day to Safety

The Institute of Scrap Recycling Industries (ISRI) is urging its members to take a time-out for safety today, following at least 11 workplace deaths and multiple critical injuries since early August.

ISRI has declared Oct. 15 to be Safety Stand-Down Day, encouraging members to stop operating for at least one hour on every shift to engage in safety awareness training. Members can find safety tips, training outlines, inspection checklists, videos and other resources at the ISRI Safety website.

In an Oct. 8 letter to members announcing the safety day, ISRI leaders wrote:

“These tragedies at our member facilities have not only changed the affected families, friends and coworkers forever, but also the company’s owners’ lives and their families’ as well. It is sad and this trend must stop. Please take this opportunity to observe Safety Stand-down Day to seek out and eliminate hazards within your operations. Demonstrate to your workforce that safety is your number one core value and that you consider them to be the most important asset of your operation. Remember, Safely or Not at All.”

ISRI’s Safety Outreach Services provides hands-on assistance free of charge to members as well. Members and non-members can also subscribe to ISRI’s Safety Update newsletter.

Click here to tell us how you emphasize safety at your recycling center, and we will share your story with our readers.

10/15/2014

ScrapyardPRO

Request a Demo



ScrapyardPRO

4540 Southside Blvd., Suite 502
Jacksonville, Florida 32216
(904) 642-3546

ISRI Member

Our Story

We started 20 years ago as Web4Minds, a software development firm that provides custom solutions to meet our clients’ needs. One such client came to us four years ago to develop software to manage their scrapyards.

Upon receiving feedback from the client and working with dozens of others, we realized that we had created a product that stood out among the competition, so we brought our solution to the marketplace as Scrapyard Pro. It is now used at recycling centers across the country, by clients ranging from single-location owners to regional operators.