Home | Business News | Browse by Publication | M | Metal Center News

Scrap: From nuisance to windfall; skyrocketing scrap prices have changed service center attitudes, and approaches, to handling waste material.

Article Excerpt
THERE WAS A TIME when service centers viewed scrap in a way the name suggests: as leftovers from the main course of business. But with demand for scrap far outpacing the supply sought by metallic-hungry mills--and prices of steel, aluminum and copper scrap at record highs--service centers suddenly see all those remnants, skeletons and shavings produced by their processing operations as icing on the cake. Dessert rather than debris, if you will.

Since early 2003, the price of steel scrap has jumped more than 300 percent, to a high of over $400 per ton for No. 1 bundles in 2004, according to historical data from American Metal Market. Steel scrap reportedly has sold from the mid $200s to the mid $300s throughout 2006, reflecting both its higher price and higher volatility. The story is similar for high-quality nonferrous scrap, where the price for copper has risen from 60 cents per pound in late 2003 to a high over $2.50 this summer, while aluminum scrap has doubled to more than 60 cents per pound.

With mills from the Midwest to the Far East bidding up scrap prices to such new heights, it's no longer sensible for processors to ignore what has become a valuable asset. "Twenty years ago, we didn't care what we got paid for it; it was something we threw away. Today, it's a core component of your overall cost equation" says Stuart Ray, president and chief operating officer at Mi-Tech Steel, Louisville, Ky.

Scrap merchants around the country report a similar shift in attitude. "[Service centers] are more aware of it today than they were a few years ago because the scrap they are selling is such a huge fixture on their financial statement," says Richard Gertler. "They've always concentrated on the core business, and looked at scrap as a secondary commodity. But with prices as they...