Thursday, May 14, 2009

Demand for Scrap Evaporated, slowly inching upwards

Drop In Chinese Demand Melts Scrap Metal Market

November 13, 2008 · Just months ago, scrap metal was in such high demand that thieves around the world were pulling up manhole covers, fire hydrants and even monuments to the dead to sell them. Driven by China's insatiable appetite, prices for scrap metal had skyrocketed. But now, the scrap metal industry has been hit hard by the global financial crisis — and scrap yards themselves could be facing the scrap heap.

Scrap Metal being sold to India: then... not now

The Indian metal industry is growing at a pace as fast as India’s industrial economy, offering one of the steepest returns in the Asia-Pacific region. The metal scrap recycling industry in India, is also growing at a rapid pace. As there is less domestic scrap generated then demand, India imports about half of the 1.2 million metric tons of scrap metal consumed annually in the country.

The United States is a major exporter of ferrous and non-ferrous scrap into India. According to the U.S. Institute of Scrap Recycling Industries Inc. (ISRI), the U.S. based scrap industry is a significant exporter of high quality scrap commodities to industrial consumers worldwide. Asia, and India in particular, is one of the fastest growing markets in the world for scrap metal. In 2005 (the latest year for which data is available), U.S. scrap exporters shipped more than $350 million of scrap commodities to India, including approximately $250 million of ferrous and nonferrous scrap. (see Market Demand below)

Though the opportunities in the Indian scrap sector are large, the industry is unorganized. Thus, U.S. companies are encouraged to be careful in all of their deals. Many Indian scrap importers are small and it is important for U.S. exporters to check the credentials of an Indian company. ISRI’s specifications should be used at all times to eliminate any possible discrepancies. To avoid disputes, U.S. exporters must insist on inspections before shipping the products. In addition, U.S. exporters must adhere to the Indian government regulations related to scrap metal exports including registration with India’s Director General of Foreign Trade. Disputes can be reduced by adhering to the critical aspects of procedures for exporting cargo (see Market Entry) of scrap containers to India.

From Dumpster Diving 4 Instant Cash
Prices paid for scrap aluminum cans here in Frederick Maryland up a nickle, from low of $.25 lb to $.30 lb.

Reader Input

A reader writes this:

Am I missing something? I have a medium sized range, three clothes washers,  a pellet stove (heavy sucker) and a couple commercial electric service  panels, and a five drawer lateral file cabinet. 
(I'm trying to make space in my evidence storage locker) 
If I am willing to give myself a hernia and  then re injure it 5 times loading this stuff on a truck, and I drive it 30  miles to a scrap dealer and he buys it, I could make back half of my truck  rental expense???? 
What is wrong with this picture? Why would you be in  this business, and is it true that the red Chinese are buying our scrap the same way our other friends did in the 1940's? 
Thanks in advance for sharing  your insight.

My response:

... yup, the days of profitably scraping light weight metals such as tin, junk appliances seem to be gone at least for the next year. When I did it full time back in 2004, 2005 prices were at a 6 year high according to the scrap dealers who were paying me.

I guess we'll have to wait for the economic recovery... which will come (unless the democrats screw things up by being too greedy with their income redistribution/ social engineering experiment). You know... demand rises constantly, it may be pent up demand but when the credit markets/ housing markets/ financial markets settle down and who ever has to take their well deserved lumps takes them... we will be back with a vengance.

Pent Up Demand
That's what got us out of the last depression.

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