What Goes Up. . .

As Gomer Pyle, used to regularly say to Sgt. Carter—“Surprise, surprise!” What has gone unbelievably up and up, is now starting to go down and down.

Scrap steel prices (and new steel too) have been on a non-stop elevator ride to floors that none of us ever thought were in the building. Those of us in the scrap trade were ecstatic when prices doubled to levels that we were absolutely dying with. When those levels tripled, fear tempered our good spirits as customers found it difficult to even get the material they needed for production.

What was available came at prices that quickly buried the extra cash you got for your scrap. As prices continued to climb, sewer grates, chain-link fences and every piece of steel that wasn’t nailed down was getting stolen right off the street. Everybody wanted to know when it would end. The answer is, now!

While too early in the month (at this writing) to know exactly how far scrap is dropping for April, the smart money is predicting $30-$60 per ton off the record March prices. Most of us see additional hefty cuts coming for May and June as well. Along with the collapse of this bubble will be the traditional summer pricing doldrums as demolition contractors flood the market with their obsolete scrap and other items that are always easy to find in the warmer months.

Mostly everybody saw this coming by the ides of March (March 15), when a distant melody turned out to be a very large lady singing.

I, for one, am glad it’s over. We have many scrap boxes in unsecured areas. These boxes are normally emptied every two weeks. However, they have not been serviced in five months because somebody else does it every night.

Unscrupulous scrap dealers who are ordinarily shy about coming out during the daylight hours have found it easy to quote higher prices into a rising market that eventually enables their quote to become legitimate. All in all, this has been a tough, exhausting run, and seeing the market heading downward is pretty comforting to a tired scrap guy.

I guess the biggest question you have as a customer is, “When will the price of the new steel go down too?” While naturally unable to predict that with certainty, it can be safely said that scrap went up for quite a while before the new steel prices followed, and scrap will likely go down for a while first as well.

Little birds are telling us that the nasty surcharges will end within weeks, and the price will begin to fall in 45-60 days. The most important thing to keep in mind is that even though this market is falling now, it is still sky high, relatively speaking. Because of that, you will want to look hard for anything lying around that ought to go in the scrap box. Old machinery that was almost worthless a year ago will still bring a damn respectable dollar for scrap. Marty Forman.

The author is a third generation scrap metal dealer from Milwaukee and president of Forman Metal Co. He may be reached at (414) 351-5990