Steel mills are expanding melt shop capacity at the same time technology is changing feedstock requirements. John Sacco, owner and president at Bakersfield, California-based Sierra International Machinery, moderated a panel discussion at Scrap Expo 2025 in Louisville, Kentucky, last September on how these changing raw material requirements and scrap flows are affecting the metals recycling industry.
During the session, A Changing Landscape, industry experts highlighted five key trends shaping the scrap metal market.
Rapid mill capacity expansion drives demand
Melt shop expansion, especially in the southeastern United States, is changing the way material moves and how mills buy scrap. The growing capacity in the region is beginning to influence buying behavior, with more mills doing direct business with processors, according to Frank Goulding, Southeast ferrous marketing manager at Orange, California-based SA Recycling.
Rail service also has improved, allowing mills to expand their sourcing regions.
“From a logistics standpoint, railroads are finally starting to focus more on service to our industry, where in the past we were secondary to them,” Goulding said.
While demand for scrap is increasing, mills also are tightening their expectations as part of their refined buying strategies, further increasing competition for high-quality feedstock.
Supply is stable, but grade values are shifting
While scrap supply holds steady, the value of individual grades continues to fluctuate as export flows tighten and mills change their buying strategies.
Goulding noted that there’s no shortage of scrap, and the market had been in balance for the last five months as of September 2025, which is why the industry saw sideways pricing during that period.
“Without the export market, the prices would definitely go down,” he said. “We need to see the export market at least maintain its current rate or improve a little bit as we’re right at the verge of seeing prices go down. With regard to prime grades, they’re more volatile, with a slight oversupply that contributed to a price drop in [August 2025].”
In 2011, the U.S. exported around 25 million tons of ferrous scrap. In 2025, the nation was on track to export about 12 million tons.
This gap doesn’t mean the industry is generating 12 million fewer tons, according to Nick Tolomeo, a trader with Montreal-based American Iron & Metal, and Ryan Eckert, general manager of Kansas City, Kansas-based Advantage Metals Recycling—a Nucor Corp. company. Rather, it means more material is staying within the domestic market because of logistics issues, quality demands and new mill investments.
“Mills are paying the right number for shred to keep it domestic, which is widening the price spread between grades,” Tolomeo said. “For example, heavy melt used to be about $20 below shred, and now it’s $60-$100 cheaper.”
Technological advancements transform operations
Advancements in technology continue to change scrapyard operations, making them smarter and more productive.
In the modern market, the capabilities of available technology exceed what the metals recycling industry could have dreamed of five to 10 years ago, according to Bill Sulak, president of Detroit-based Ferrous Processing & Trading Co.
“Innovation is at the heart of what it takes to be a steel producer but also a scrap processor,” he said. “It’s capturing the intrinsic value of the commodities that we produce, it’s having that relationship and communication and it’s being a good supplier and working with processors and steel producers to navigate this landscape.”
Technologies such as artificial intelligence, robotics and advanced sensor sorters allow processors to efficiently clean up recycled metal grades, reducing contamination, enabling them to meet more stringent furnace requirements.
Collaboration and adaptability matter
As recycling companies work to be better suppliers to mills, collaboration, clear communication and adaptability are the keys to success, according to the panelists.
“As a supplier, you need to understand what the mills struggle with and then get the buyer to understand what you’re struggling with,” Eckert said. “It’s a deeper level of understanding than just selling or buying scrap every 30 days.”
Additionally, being adaptable can go a long way.
“Scrapyards need to be nimble, versatile and willing to pivot … I don’t think going all in with one strategy is the way to go as [the market] is constantly changing and you have to adapt,” Tolomeo said.
Tariffs fuel a closed-loop steel market
Trade policies—particularly for steel—continue to shift, making it necessary for mills and their scrap suppliers to reconsider their export and domestic buying and selling strategies.
Canada, for example, once had one of the highest import penetration rates in the world and relied heavily on the U.S. as an outlet for its steel and other materials. Now, the country’s steelmakers are learning how to live within Canada, according to Tolomeo.
In the U.S., Section 232 tariffs similarly have reshaped business models, while retaliatory tariffs have limited export opportunities, driving operators to focus more on the domestic market.
As 2026 begins, concerns about more potential retaliation and the need to protect the domestic market remain top of mind for the industry.
“China used to be a net importer of steel not that long ago, and they’ve essentially stopped importing any steel. They’re just a one-way street out of the country,” Tolomeo said. "We can say all we want about clean steel, but a lot of countries just like cheap steel. They don’t care how or where it gets made; they want to build cities the same way the U.S. built cities with dirty steel, and they’re going to do that. The only way to protect against that is to build a bubble in North America and Europe and live within that bubble.”
Goulding added that there’s really no way to control what China does in regard to its steel production.
“We’ve opened Pandora’s box with them, and if they want to flood the market, they can flood the market,” he said. “The only thing we can do is put up protections around the U.S. and Europe and do the best we can.”
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