Steel scrap margins contracted significantly: BIR Ferrous Board meet

30 Oct 2013 Last updated at 08:06:37 GMT
 
BRUSSELS (Scrap Monster) : The participants at the Bureau of International Recycling (BIR) Ferrous Board meet observed that reduced margins pose a big threat to the steel scrap industry. It also noted that there has been a considerable fall in steel scrap arising in Europe, making scrap collection even more challenging.

The region’s industrial production has witnessed huge down fall recently. According to data, the industrial output by Italy has fallen almost 25% over the past two years. Lower industrial output has led to reduced availability of scrap in market. This has resulted in immense competition among scrap collectors. The collection rates have gone up. At the same time, the retails price of scrap to steelmakers has slipped down, thereby contracting the margins. Even though the market has shown some improvement recently, it has not made much impact on the gross margins of recyclers.

The available scrap volumes have fallen by almost 50% in some areas of Europe. The lack of new arising has most badly affected the small scale collectors. Many scrap recyclers are seen reducing costs to protect the margins from falling further.

Author: Paul Ploumis