Schnitzer fee designed to protect margins

Portland, Oregon-based Schnitzer Steel Inc., which operates more than 90 scrap yards in the United States, reportedly is adding a $5 to $10 per ton surcharge called a “facility fee” to its ferrous and nonferrous purchasing transactions.

Reported by Argus Media April 13 and by Davis Index April 16, the fee structure took effect April 15, according to Argus, and applies to “all ferrous and nonferrous materials purchased at its locations.”

Schnitzer, which ranked as the fourth-largest ferrous scrap processing firm in North America in a recent Recycling Today list, will use a sliding fee scale depending on the facility’s state and city location “because of the differing costs of compliance and requirements to meet regulatory standards throughout the country,” according to Argus.

In the scrap processing sector, auto shredding has come under increasing air and water emissions scrutiny, with the California Department of Toxic Substances Control having particularly zeroed in on metals shredding. In Chicago, a new shredding plant with partial indoor operations has been unable to open under the Lori Lightfoot administration in that city.

In its April 16 article, Davis Index reported that scrap generators, likely including smaller dealers, demolition contractors, manufacturers and peddlers, are reaching out to Schnitzer’s competitors to see if they have or are planning to implement a similar fee.

The metals information service notes scale prices largely are poised to decline in late April and early May, based on global metals pricing trends, thus creating potential resistance. Davis Index writes that some scrap suppliers also object because “the new fee was unilaterally imposed versus negotiated,” which can be a more standard practice in the metal supply chain.

As of Sunday, April 17, there is no posted notice or explanation of the fee on the Schnitzer Steel Industries website.