Overcapacity and China drag on scrap: Sims

Oct 30, 2013 | 03:16 PM | Lisa Gordon

Tags  scrap metal, overcapacity, China scrap, shredder, Sims Metal Management, Bob Kelman, Lisa Gordon

CHICAGO — The U.S. scrap market can expect headwinds for possibly two years before the sector returns to more prosperous times, according to a Sims Metal Management Ltd. executive.

Overcapacity in scrap metal processing and the swooning presence of China have curtailed margins and created a less-than-optimal environment for recyclers, Bob Kelman, president of Sims’ North America Metals division, told attendees at AMM’s Steel Scrap Conference in Chicago. "The industry begins and ends with two words: overcapacity and China. Swings in prices, supply and demand are the norm."

Overcapacity in scrap processing is prevalent in all North American markets, which has created intense competition between companies. "In some cases, market cannibalism is occurring," Kelman said. Metal recyclers used to expand to gain market share, but a new trend of consolidation in an effort to maintain existing market share could be on the horizon.....





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