Expanding frag operations shred past market results

May 31, 2011 | 07:00 PM |

Tags  Auto Shredder, Frag, ISRI, Wendt Corp,

Over the past decade, the number of shredders operating in scrapyards across North America has skyrocketed—projected to reach 302 by the end of this year, a 56-percent increase from an estimated 193 in 2000—as supply and demand of shredded material have been locked in a mutual growth cycle.

As demand and prices rose significantly in recent years, adding a shredder—or starting up a new yard featuring one—became a relatively common business decision. Profit margins on material produced through shredders were strong, as mini-mills in particular—because of the needs of their electric-arc furnace operations—snapped up as much shredded material as they could find.

"This has become an extremely popular grade, especially with certain mill operators," a leading Midwest broker said. "The mills that use frag are very comfortable and flexible in their mixes and will ride the market from cycle to cycle. What they have found is that frag more often than not is what suits all of their considerations best."

Shredded scrap is defined by the Institute of Scrap Recycling Industries as homogeneous iron and steel scrap, magnetically separated, originating from automobiles, unprepared No. 1 and No. 2 steel, miscellaneous baling and sheet scrap, with an average density of 50 pounds per cubic foot. Most of that mix is usually fist-sized, homogenous pieces of old automobile hulks. ....