At least once a year, and always in step with the Institute of Scrap Recycling Industries' annual convention and exposition, AMM takes a close look at the financial ups and downs, major themes, high-profile players, companies and events that have made their mark—good or bad—on the ferrous and nonferrous scrap industries over the preceding 12 months.
What a year it's been, particularly in ferrous. Fairy-tale-high to horror-tale-low prices prevailed in a roller-coaster market that took a death-defying dive in the final quarter of last year.
With mill capability utilization rates stuck well below 50 percent and players from one end of the metals supply chain to the other still searching for convincing signs that the economy has hit bottom, there's little question that the story of the year in scrap—as well as in steel, metals distribution, fabrication, construction and manufacturing, for that matter—is the meltdown of the world's financial market.
The theme of ISRI's annual convention in Las Vegas is "Challenge, Opportunities, Change"—with the emphasis definitely on change. And while ferrous scrap processors, dealers, traders and consumers are eager for change to lift the scrap and steel markets out of the funk they are mired in, there's little question that one of the most dramatic changes visited on the North American ferrous scrap scene over the past year was the purchase and subsequent absorption by Nucor Corp. and Steel Dynamics Inc. of David J. Joseph and OmniSource Corp., respectively.
In this month's cover story (page 26), AMM chief scrap correspondent Michael Marley surveys a variety of sources to assess the impact of the scrap business acquisitions on the mills that purchased them. Although both Nucor and SDI declined to participate, industry analysts are unified in their view that, short term, the acquisitions have been anything but value-enhancing.
When times get tough, the tough typically get tougher about the credit terms extended to even their best customers. In a sign-of-the-times story on page 30, scrap reporter Paul Schaffer takes a close look at the pros and cons and asks recyclers to rate the return on credit insurance.
Finally, nonferrous reporter Anne Riley takes a cautionary look at the flood of copper scrap contracts ripped up last fall by Chinese buyers and what, if anything, U.S. exporters learned from the experience (page 32).
That's it for now. Happy reading!