Metalico expecting ferrous scrap demand to slow in 4th quarter

Nov 05, 2009 | 12:12 PM | Lisa Gordon

Metalico Inc. is bracing itself for a slowdown in ferrous scrap demand following a sequential improvement in its third-quarter financial results due to higher selling prices and increased shipments.

"Stabilization that began in the second quarter has continued. We remain cautious in our near-term outlook as domestic demand from (steel) producers and seasonal slowdowns could impact prices for the rest of the year," Carlos E. Aguero, president and chief executive officer, said.

And while there has been a steady pickup in business, volume is still off its historic norms.

With uncertainty still pervasive in the economy, the recycler plans to hold off on acquisitions and has shifted its focus to an organic growth strategy. "Acquisitions are not a prudent move in the (current) economy, so we are growing organically by pursuing new supplier relationships and being more aggressive with existing suppliers," Aguero said.

Metalico plans to open smaller scrap collection facilities in existing markets to serve as feeder yards. "Our focus is to increase how much scrap we buy by opening new buying centers to get better utilization of capacity," he said.....