IAR Recyclers Newspress January / February 2016

26 / 28

ARA Updates
Industry news from the national association
Page 26 Recyclers News Press
Professional Solutions
Clive, IA
QRP Salvage Solutions
Tomahawk, WI
&
Recyclers Power Source
Spirit Lake, IA
S & L Auto Parts, Inc.
Newton, IA
Shine Bros. Corp.
Spencer, IA
Sioux City Compressed Steel
Sioux City, IA
The Locator Magazine
Whiting, IA
Steel Price Depression
Has Huge Impact on Businesses
Historically low steel prices are the result of many factors and are having
a significant impact on recyclers and many other businesses. Scrap steel
prices are approximately $50 per ton, down more than 70 percent from
one year ago.
Reporting reasons for this decline include a downturn in the Chinese
economy, a strong dollar which decreases exports, falling oil prices that
depress the need for steel pipes by energy companies, record levels of
cheap imports, a drop in the industrial and agriculture machinery market
and excess supplies of metal commodities like iron ore. All of these fac-
tors have a ricochet effect on the auto salvage industry and beyond. Cus-
tomers are getting less money when selling their cars to salvage yards
and salvage yards are getting less money when they sell their scrap.
Metal collection facilities, particularly in the automotive scrap business,
are laying off employees and shuttering facilities. Some in the industry
have noted that the price of scrap is so low that it doesn't pay for the fuel
cost to haul auto bodies to scrap yards. Adding to economic woes creat-
ed by low steel prices are the problems of industry consolidations and
overseas competition in online automobile auctions.
Also, the increasing technical complexities of new vehicles are making
home repairs increasingly harder to do. But some experts are cautiously
hopeful that scrap prices will begin edging slowly back this year as na-
tional and global economies improve. They note the prices have reached
as low as they are going to go simply because steel can't be manufac-
tured any cheaper than it is right now.
In the interim, according to some scrap companies, there are some
things that auto recyclers can do to help counteract these low pric-
es. For example, whole cars can be sold versus hulls so auto recy-
clers can save time pulling motors, transmissions, wire harnesses, etc. A
whole car contains 64% ferrous steel and 6 % nonferrous compared to
53 % ferrous and 2 % nonferrous for a hull. Auto recyclers can also look
at scrapping cast iron, like in brake rotors and drums, transfer cases and
clean motor blocks. Scrap companies noted that if cast iron is segregat-
ed, it can bring $30 to $40 more a ton over shredder feedstock. In addi-
tion, removing plastic bumpers, fenders and glass will also increase val-
ue as consistency of supply quality is critical.