Scrap volatility does not trump business savvy

May 26, 2013 | 07:00 PM |

Tags  The Great Recession, scrap industry, ferrous scrap, No. 1 heavy melt, No. 1 dealer bundles, No. 1 busheling, shredded scrap

The Great Recession and its aftermath has been an interesting period for the scrap industry, to say the least. Demand and prices have dropped, soared, fallen and leveled out, while profit margins for the most part have been good.

Just two years ago, markets were in a state of near-euphoria after domestic mill productivity rebounded sharply and scrap export demand reached record levels. No one then thought that prices would reach historic highs, and yet 2011 saw the biggest average annual ferrous scrap values in history.

Although ferrous scrap prices were still at relatively high historical averages in the first quarter of 2013, they were well behind the first-quarter averages of the past two years. Still, No. 1 heavy melt, No. 1 dealer bundles, No. 1 busheling and shredded scrap are at strong levels, despite the volatility of the past two years. The combined average annual value of these materials through May 2013 is about 192 percent higher than it was 10 years ago, outpacing U.S. job growth, wages, energy costs, benefits (health care, pensions, etc.) and even the Dow Jones Industrial Average, which is up about 30 percent from 10 years ago (based on mid-May closing vs. yearly closing figures).....

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