FULL OF SCRAP What mills? A new upper hand in the old scrap game

Jan 01, 2008 | 09:58 AM |

Several insightful comments came from the panelists at AMM's Scrap Conference in November. One in particular sparked my interest. It was the suggestion that scrap processors and others are driven to consolidate because major manufacturing companies—industrial scrap generators—want to deal with a single processor who will handle all the scrap metal from their production plants.

Scrap processors have the distinct experience of serving two customers—the steel mills and smelters that buy and melt scrap, and the manufacturers that generate scrap as by-products. The auto industry's factory bundles are perhaps the best example of scrap generators—some stamping plants produce as much as 15,000 tons of baled steel scrap a month. At $300-plus per ton, those bundles are not waste—it's another product line for auto companies. It may not be as profitable as a Cadillac Escalade or even a Toyota Camry, but selling it wisely can offset some of the costs of production.

All of the nation's auto manufacturers aren't the size of General Motors Corp. Many are smaller, but they still generate enough scrap to make it worthwhile to recover. Scrapyards often were founded by individuals who had enough entrepreneurial spirit to believe they could make a buck or two from the material. They were—and many still remain—local businesses. Expansion often was achieved by opening a feeder yard in the next town, collecting scrap there and hauling it to the main yard to be baled or sheared. Scrap dealers and processors often refer to these small manufacturers and scrap peddlers as their customers, and they have been chided by steelmakers and some in their own ranks for not seeing steel mills and nonferrous metal smelters—companies that buy prepared scrap—as their customers.....