According to this article, the US is exporting steel at levels comparable to the peak of 2008. And yet the overall level of scrap has declined dramatically. Obviously, that would mean the percentage of exported material from the total available in the US has increased significantly.

That, of course is also reflected in the lower steel production rates from US mills. Since they are producing less material, they don’t need as much scrap to feed their production. On top of that, we have seen large inventories of scrap at several steel mills, which seems to indicate they are well stocked for the lower production rates.

Given that scenario, it seemed strange that US steel mills across the country that use scrap recently raised the price they were willing to pay for scrap. The article referenced above might just hold the key to understanding why.

The shortage of scrap iron in the US is only going to be exasperated by the higher rate of scrap exports. The weak dollar not only makes US scrap more attractive, it also makes steel more attractive. So if US steel mills continue to find good export markets for their steel and things start to loosen up in the US, the mills could find themselves short material and having to buy at a huge premium. Keeping more of the flow to themselves now might seem much more attractive than what could come later. They also make it even more expensive for their foreign competitors to import steel into the US.

That’s my take on it – does anybody have another theory about the rise in scrap prices just at a time when we normally see them soften up due to seasonal slowdowns?

A friend over in Greensboro, NC (who I have never officially met except in cyberspace) has supplied a series on his blog about preparing scrap metals for recycling. Since I got behind in my reference to these articles, I thought I better catch up. So, here they are all at once:

• Part 7
• Part 8
• Part 9
• Part 10

I hope you found them as informative as I did. Thanks, RecycleBills!

According to an article in Recycling Today, the World Steel Association is forecasting growth in the global steel industry of 9.2 percent, resulting in production of 1.206 billion tons of steel. In the US, they are forecasting a growth rate of 18.8 percent. From a US steel distributor’s perspective, that seems like quite a leap.

All across the US, demand appears to be weakening as construction and manufacturing contract in the face of the annual winter slowdown. Across the northwestern US, many fabrication shops are only seeing a 2-3 month backlog of orders, with very little coming on the horizon.  So if the forecasts are even close, the second half of 2010 would need to be pretty good. I guess we’ll see what happens but as positive a person as I am, it seems like quite a stretch to me.

I hope that somehow the forecasts come close. Not only will it affect our steel revenue but probably even more, our scrap revenue. As steel demand heats up, so will scrap demand, which is still experiencing a shortage here in the US. That shortage will likely cause price increases, which bodes well for scrappers as long as we don’t experience a fall-off similar to last year. Either way, I think we are in for an interesting ride.

So, do you see something different than me? Any positive news you have heard that would have long-term consequences?

California better consider well how they approach this problem or they could find themselves with tons (literally) of junk cars on their hands. In the article, California state officials are hot after stopping shredding companies from using fluff, the leftover material from recycling metals from cars, as daily landfill cover. If they manage to restrict fluff from landfills, shredder operations in California won’t be able to process cars or appliances. So, instead of fluff in the landfills, they’ll have mountains of old cars and appliances. Careful what you wish for…

Pacific Steel & Recycling is proud to announce that we finally have our automobile drain rack for the proper evacuation of fuel, oil, other fluids, and CFCs from scrap vehicles. We no longer have to rely on another company to do those things before we are ready to process a vehicle. It’s only our first so it will be awhile before all of our recycling facilities have one but this is a great day for us. It provides us with a lot more control over the environmental concerns connected with recycling cars.