Uncertainty rules scrap after Great Recession
Mar 28, 2013 | 07:00 PM
| AMM staff
No one saw it coming, or at least said nothing about it at the time. Five years ago, as more than 5,700 attendees gathered in Las Vegas for the Institute of Scrap Recycling Industries 2008 annual convention, scrap prices stood at near-record highs, with even higher levels yet to come over the next four months. The boom seemed unstoppable.
Scrap prices had been on a bullish ride since 2004, the first year that prices consistently hit the $200- and $300-per-ton levels for obsolete and prime scrap, respectively, over a sustained period. Although that trend cooled a bit at times over the next two years, by 2007 the boom was back in full force and that momentum carried over into the first quarter of 2008.
Scrap players heard strong, confident messages during the 2008 conference, according to ISRIs Scrap magazine. The booming steel market appears quite sustainable, Aldo Mazzaferro, analyst at New York-based Goldman Sachs & Co., said in the May/June 2008 edition. Scrap prices, meanwhile, could climb even higher on the back of already strong global demand that will only intensify as electric-arc furnace capacity grows.
The average price for No. 1 (heavy melting scrap) has increased 240 percent since 2000, Eric Glover, equities analyst at San Francisco-based Canaccord Adams Inc., said in the May/June edition, asserting that the days of cheap scrap are long gone. He projected a new higher pricing floor of $300 a gross ton, noting that while volatility will continue, prices will continue to march higher.....
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