Departments - Scrap Industry News

March 24, 2006


Coaxing more scrap across scales and into processing facilities remains the biggest challenge for many recyclers, who are eager to take part in markets that remain profitable.

The high pricing of the last two years has helped spur equipment purchases to boost productivity at some locations, and the investments are paying off—as long as enough feedstock can be acquired.

"Generation is slowing down a little bit," reports one Midwest recycler. But he then notes that the high scale prices for not only ferrous scrap but aluminum and copper as well are keeping peddlers and small dealers active.

"Scrap still comes out of the walls when prices go up," he remarks. "We’ve had a sheriff thank us because people are hauling up things that they or someone else dumped in creek beds years ago."

The downside of attractive scale prices has been the worldwide increase in the theft of metals from construction sites, abandoned buildings and any number of other places (including sewer covers and power lines), as well as an increase in armed robberies at scrap yards. (See "Book ’Em," starting on page 230 of this issue.)

In the Western United States, a shredding plant operator notes that while structural steel from demolition and construction projects can be found, competition for auto bodies, appliances and other forms of scrap to feed his shredder is fierce. "Not question about it, it’s tough to find enough scrap right now. You’ve got to really work," he says of the current situation.

What the year will bring in terms of industrial scrap generation also holds some mystery. As happens in the early part of each year, automotive sales and production figures are being watched closely by recyclers who take in auto-related stamping and machining scrap. There are fears in some parts of the country that a consumer shift away from SUVs and large pick-ups will prove harmful to scrap generation levels at some once-thriving production plants.

If the average vehicle size becomes significantly smaller in a short span of time, that will not only generate less scrap, but would likely result in a reduction in some grades of steel produced in the domestic market, as well.

Such a situation could strike a balance in the overall market, but it would nonetheless have an impact on recyclers at specific locations—especially if the vehicle shift results in market share gains for some producers stronger in the compact car category (such as Honda and Toyota) over others who have been bigger players in the SUV segment, such as GM and Ford. (For more on this subject, see "Southern Migration," starting on page 68.)

While automotive trends catch the attention of recyclers domestically, on the international front the state of the Asian steel industry will remain critical. The demand for melting stock in China remains impressive. In 2005, that nation imported some 1.5 million tons of shredded scrap from the United States, according to U.S. Commerce Department figures.

In terms of percentage growth in this export market, India is emerging as an important destination. Its 2005 volume of ferrous shred imported from the United States jumped to 460,000 tons, up by some 250 percent from the 2004 figure of 130,000 tons.

Overall, the early returns on 2006 are positive. Recyclers may be wondering for just how long such demand and pricing can continue, but there is also a sense that as long as Asian economies are growing at warp speed, scrap will be a wanted commodity.

(Additional news about ferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)


Steel Dynamics Inc. (SDI) has announced net sales of $2.2 billion for fiscal year 2005, a 2 percent increase over 2004 net sales of $2.1 billion. However, net income declined for the year to $222 million from $295 million in fiscal year 2004.

SDI, based in Fort Wayne, Ind., recorded $65 million in net income for the quarter, compared to $82 million in the fourth quarter of 2004. The company’s fourth quarter net sales were $570 million, which is 5 percent lower than net sales for the corresponding quarter in 2004.

SDI’s operating income was $109 per ton shipped in 2005, with an operating margin of 18 percent.

Consolidated shipments for 2005 grew 5 percent to 3.6 million tons. Fourth quarter shipments were up 9 percent to 920,000 tons compared to 846,000 tons in the fourth quarter of 2004. Compared to the third quarter of 2005, fourth quarter consolidated shipments were essentially the same.

The average consolidated selling price per ton shipped in the fourth quarter increased 15 percent to $619 from $540 in the third quarter, but was 13 percent lower than the $710 achieved in the fourth quarter of 2004. Steel scrap increased $41 per net ton from the third to the fourth quarter of 2005.

SDI’s 2005 capital expenditures of $63 million were somewhat lower than initially planned, as the company delayed several planned projects.

"Although steel demand fell off sharply in the first half of the year, steel shipments rebounded in the second half of the year with backlogs remaining strong as we move forward in 2006," Keith Busse, SDI president and CEO, says.

"SDI anticipates first quarter results to be relatively unchanged, if not up slightly, from the fourth quarter," Busse adds. "Selling values could rise slightly, but it is too soon to make that call."

SDI’s acquisition of Roanoke Electric Steel should be completed by the end of the first quarter of 2006, giving the company nearly 5 million tons of steelmaking capacity.


The steelmaking and fabricating units that formerly operated under the Structural Metals Inc. (SMI) name are changing their identities to become the CMC Steel Group.

A new name and logo will be in place for the former SMI operations effective March 1, 2006, according to corporate parent Commercial Metals Co. (CMC), Irving, Texas.

The company says the new corporate identity will "provide a cohesive, instantly recognizable identity associated with its core business."

Murray McClean, president and COO of Commercial Metals Co., says, "Since CMC has grown larger and stronger over many years, offering more services in more places to more customers, the company needs a single, streamlined identity system that helps customers worldwide always know when they’re doing business with CMC."

Russ Rinn, president and CEO of the newly named CMC Steel Group, says, "For years the more than 11,000 employees in the CMC family have operated in over 150 worldwide operations, utilizing many different business names with different logos. Now, it’s time to bring our corporate family together under the unifying CMC name and utilize common logos."

Commercial Metals Co. and its subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network that includes steel mini-mills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices throughout the United States.


Moly Cop Steel has completed its purchase of Alta-Steel Ltd.

AltaSteel’s 360,000 ton-per-year mini-mill was a part of Canada-based Stelco. It is the only steel mill in Alberta.

Moly Cop Steel Inc. is an affiliate of Scaw International, a South Africa-based steel company. Scaw is a wholly owned part of Anglo-American, a large global mining and industrial company.

Scaw says it intends to continue operating Alta-Steel in its current lines of business and in its current location near Edmonton, Alberta.

Courtney Pratt, Stelco president and CEO, says, "This is positive news for everyone concerned. It provides AltaSteel with ownership that views it as a strategic asset. It provides employees and retirees with increased certainty. And it enables Stelco to focus on its integrated steel business going forward."