Drop in global Scrap prices hit New Zealand Scrap Metal Recycling Industry

NEW ZEALAND November 15 2015 6:04 PM

By Narelle Henson
Stephen "Hank" Woolston started up a scrap metal business five years ago to create a better future for his kids. Now, thanks to crashing steel prices, it's all on hold.

Layoffs and closures lie ahead for New Zealand's scrap metal recyclers as they are hit by tumbling international prices.

For at least one, it has already meant closing the doors until prices recover.

Stephen "Hank" Woolston, owner of Hamilton City Recycling Service, says running his scrap metal pick up business - which serves mostly older clients - is no longer viable.

He closed down last week and says he won't be picking up the old lawnmowers, fridges or other scrap again until he can make money again.

"It's got worse and worse. It's got to the point that it's not even worth going out to pick the stuff up," he says.

"All I can try and do is ride the storm out."

Woolston says many of those in the industry are feeling "a bit worried" about prices, and the biggest concern is when they will go back up.

"I think it's going to affect a lot of people. Lots of workers going to lose their jobs," he says.

Slack global demand for steel, which makes up the majority of recycled metal, has seen prices drop 35 per cent in six months, and almost halve in a year, dropping 41 per cent since last October. During the past year dairy has seen prices increase by 5 per cent, although they took a 46 per cent dip in the first six months of the year.

Scrap Palace owner Brent "Scrappy" Goodwin sees everything from pots and pans to aeroplanes and boats dropped off at his yard for recycling. He's seen two other downturns during his 22 years in the industry, but "this one's bad because because we can't see any end to it".

If price drops carry on for too much longer, he says it could "get to the stage where people will be paying [recyclers] to come pick their stuff up".

Goodwin says cutting staff is not an option, but the business is changing to try to find more cash.

"We process more material instead of sending it out whole.

"[Apart from that] you just wear it as it is and keep on going."

President of the Scrap Metal Recycling Association of New Zealand, Korina Kirk says she's already hearing of layoffs and yards closing on Saturdays to save money.

"For us this is survival time," she says.

Kirk expects the $1.7 billion export industry will see more redundancies, and yards going out of business in the next six months.

"There was a downturn in 2008 and there were a lot of redundancies, but that was a sharp drop ... over a couple of months," she says.

"This is quite a sustained drop."

Kirk said it was  made worse by a strengthening New Zealand dollar, and tight supply as people sat on scrap metal waiting for prices to recover.

Predictions "from all the experts is it is going to last six months to a year", which may mean consumers no longer get paid for scrap metal, she said.

New Zealand currently exports about 600,000 tonnes of heavy steel each year, and 50,000 tonnes of non-ferrous metals like copper or brass.

Source: Stuff.co.nz