Crazy times in the scrap industry

I feel like we should have this discussion after reading about yard after yard idling or closing operations with the market in the crapper. Here's an interesting article. I am in the STL market and some of the news I have heard is crazy. Azcon scrap in Alton hasn't run their shredder at all this year. they installed it new in 2009. I asked one of their drivers the other day when are they gonna run it again and what did they do stop buying feedstock for it. He laughed and said nope. We are running all of our feedstock to our competition grossman iron and metal. They are shredding it then they are picking the frag back up and hauling it back to Alton il. It's 20 miles from Alton to grossman in saint Louis. I was left scratching my head. They are competitors. I had more questions but the driver didn't know the answers. What price per lb are they charging to shred the material? Do they have their own pile so their material isn't mixed with grossmans? Are they getting the fluff back to run thru their downstream operations and recovering the non-ferrous? I just figured I would throw this out because I was confused and by confused it was a mindf*ck to me. I also talked to the owner of the yard I contract at. They don't own a shredder and they ship all their shred out of state. PSC metals called them at the beginning of August to try to sell them shred. They own a shredder. WTF is going on with the saint Louis shred/frag market. PSC metals must be on their death bed. How are u gonna call your competitor who's been crushing you and stealing your customers to sell them shred you just lost 25 bucks a ton on? I included an article on azcons Pittsburgh yard in this. Keep in mind PSC and azcon are both in the top ten of scrapyards by ferrous material handled in a year. Anyone have huge yards idled or anything crazy like this happening in your market?????

Riverfront 47 LP buys major tract of land that stretches from Sharpsburg, Aspinwall and O'Hara - Pittsburgh Business Times

Originally Posted by PistoneScrapProcessing

I feel like we should have this discussion after reading about yard after yard idling or closing operations with the market in the crapper. Here's an interesting article. I am in the STL market and some of the news I have heard is crazy. Azcon scrap in Alton hasn't run their shredder at all this year. they installed it new in 2009. I asked one of their drivers the other day when are they gonna run it again and what did they do stop buying feedstock for it. He laughed and said nope. We are running all of our feedstock to our competition grossman iron and metal. They are shredding it then they are picking the frag back up and hauling it back to Alton il. It's 20 miles from Alton to grossman in saint Louis. I was left scratching my head. They are competitors. I had more questions but the driver didn't know the answers. What price per lb are they charging to shred the material? Do they have their own pile so their material isn't mixed with grossmans? Are they getting the fluff back to run thru their downstream operations and recovering the non-ferrous? I just figured I would throw this out because I was confused and by confused it was a mindf*ck to me. I also talked to the owner of the yard I contract at. They don't own a shredder and they ship all their shred out of state. PSC metals called them at the beginning of August to try to sell them shred. They own a shredder. WTF is going on with the saint Louis shred/frag market. PSC metals must be on their death bed. How are u gonna call your competitor who's been crushing you and stealing your customers to sell them shred you just lost 25 bucks a ton on? I included an article on azcons Pittsburgh yard in this. Keep in mind PSC and azcon are both in the top ten of scrapyards by ferrous material handled in a year. Anyone have huge yards idled or anything crazy like this happening in your market?????

Riverfront 47 LP buys major tract of land that stretches from Sharpsburg, Aspinwall and O'Hara - Pittsburgh Business Times

Pistone,
Funny you should mention PSC and shredders being idle. Last year, Upstate Shredding / Ben Weitsman announced they were building a shredder in New Castle, PA with plans to bring the scrap war fight to Metalico and PSC. That shredder is being installed now and should be up and running this year. What will that do to the competion in western PA and eastern Ohio?

shutting down your own shredder makes perfect sense, its an expensive machine to operate with a crew, insurance on it is beyond understanding to the common person, plus maintenance. lay it up properly the vast majority of your expenses go away, especially if the machine is paid for rather then financed, the trucking is probably available because of other general downturns.

the two businesses involved are probably in a joint venture that benefits both in the short term at least.


But keep in mind there are way too many shredder operations out there especially on the US east coast so some of them will fail and go bankrupt and reorganize

Im hearing that steel is at bottom, but will take at least as long to come up as it too to go down. probably much longer because of the over-inflated Chinese bubble

V/r HT1

This is on TOPIC in a way.

The mail and package delivery businesses will use each others services when it suits them.

Ups, Fedex and others will use the Postal System and the Postal System will use their services.

we had a small yard that owns 4 locations buy a mom ad pop yard. They spent who knows how many thousands of dollars cleaning up, upgrading facilities, scales, and computers, lots of advertising, and were open for less than 6 months before they shut that location back down.

Topic of the week. I guess I should explain a little more in depth since I don't work for any of the three yards. Azcon is the mill supplier to Alton steel (old laclede steel) they make rod. The mill is currently at less then half staff and only running one shift and probably only at 40-50 percent capacity of overall melting and steel producing capability. The shredder takes 12 people or more to run and they are paying 90 bucks a ton for shredd from the street customer (peddler) so far you have low prices and a high labor cost. Now for every hour u run a shredder you need to maintenance it that same amount of time. Shredder 101. They also run this during the day when energy is in peak use resulting in a high electric bill even if they have a deal worked out with the power company it's still probably 1/4 million a month electric bill. 6,000 horsepower isn't anything to sneeze at. With the price being so low and many of the customers not shipping cars aka the material needed to run the shredder. You can go to any of these auto yards and see a pile of crushed cars as high as they could stack them and football fields long just waiting for the price to rise. The competition grossman iron and metal has a 10000 hp mega shredder that can shredd an amazing 400 ton an hour. They can shred a city blocks worth of material in a day. I have watched them do it. Azcon can only shred 60-80 ton an hour. I am guessing instead of incurring more then a half million dollars a month in operating costs they figured it would be cheaper to team up with the competition and just pay a price per lb to have grossman shred it for you. Combine this with them shuttering one of the biggest yards in the Pittsburgh market and you can see some of the shifts away from losing assets in a down market. PSC on the other hand has more problems then you can count. They haven't made money in six years. The shredder they own is homemade in saint Louis. They are limited by the fact they have to stack the frag and fluff in areas where they have a limited amount of space. The storage for material being shredded (cars, appliances, misc is also limited. The total footprint for the material prepared and unprepared plus the shredder is maybe 5-6 acres. Grossman has a massive yard with basically unlimited space. The issues facing PSC are compounded by the fact they keep losing industrial customers and money. The turnover rate on the corporate side of things is crazy. They get a new ceo yearly. It's not a profitable business model but Carl Icahn won't give up and admit defeat(ego). PSC spent 50 million buying two other scrap companies in 2011 in Saint Louis (cashs and Shapiro). They combined yards moved equipment around spent millions of dollars only to lose most of thier customers to the competition. It's a corporate run scrapyard where you have multiple layers to go through and everyone is in on the decision making so at the end of the day one decision becomes a cluster f*ck of ideas. Why they would call about selling shredd to one of the competitors who has been just crushing you is beyond me. I could name 5 major customers they lost to where I contract at. By major I mean 500+ ton a month industrial customers and demo contractors since PSC bought out the competition and made the market for yards that much smaller. I know I don't post much anymore but I would just figure I would let you know that everyone is suffering in this market from the big yards all the way down to the small peddlers. It's tough out there only the strong shall survive once it's all over with and prices start to rise in a few years. Yeah I said years.

Sounds like the making of a reality tv show. They just need to add in some sleazy sex and some network will buy it. Or write a book as a tragic drama, "The Death of Scrap Business"...