Matthew High, Founder of Scrapsaway.co.uk provides ATF Professional with his views on decreasing scrap metal prices and how China’s import ban has been a major factor in this shift throughout 2019.
I’m sure your readers and members are aware that the ferrous metal market is under a massive amount of pressure and has been in steady free fall across September. Prices have hit 3-year lows and are not looking like they are going to recover anytime soon. At the start of 2019, there was great optimism for the markets as discussions between the US and China were going smoothly. Combined with the financial markets being in the right place and the demand for steel was high it saw prices go through a significant climb in mid-February.
That was over seven months ago now, and there have not been the slightest signs of any repeated movement since then. Truthfully, there has been a massive move in the opposite direction. A move which has seen 29% wiped off the value of steel since February.
Why is there all of a sudden such a low demand for steel? It may have something to do with the fact that China has for the first this century not imported any steel into its country. The Chinese government banned any imports of solid waste materials from assisting with reducing their environmental impact targets.
With China (the biggest user of scrap metal) no longer importing scrap UK scrap yards are holding onto much more material than they would usually like to. Those with space are buying large quantities of scrap iron and scrap cars, hopefully waiting for the tides to turn.
Industry sources believe that over the next ten years this is likely to worsen still. China is thought to be soon turning to be world’s largest exporter of scrap metal flooding the market with their vast stockpiles and driving prices of all grades down.
What does it mean for other metals when the steel prices are this low? Demand for other metals increases, especially precious metals. There have been soaring reports of catalytic converters being stolen throughout London and the UK. This is thanks to the rising precious metal markets and thieves having to turn to other metals rather than the rock bottom steel market.
We will be keeping our ear to the ground waiting and wishing for some good news over the coming weeks and months. With the final quarter of 2019 approaching quickly, we strongly suggest that everyone tightens their belts as we approach what is historically the toughest period of the year. If we hear any hints of positive news, we will be sure to put it out across our social media sites, so please be sure to follow us across Facebook, LinkedIn, Twitter and Instagram.