Any Idea Why Prices Are Horrible?

Example: My yard averaged $280 a ton for sheet for a couple of years. About a year ago, the price crashed to an average of $80 a ton.
I went to the yard today, and pretty much gave a load away for free. The payout? $54 per ton. A whopping 2.7 cents per pound.
The same load that 'normally' would have given me roughly $60 gave me a measly $11.45.

The main reason that we seen excellent prices was because China was going through 'boom' expansion. They were building like crazy.
The main reason that the market tanked is because China stopped their major expansion, and began unloading all of their excess steel onto the market.

I figured that steel would remain on average at $80 per ton for a few years until China has finished flooding the market, but $54 a ton??? It's almost like the market is crashing. I've scrapped for 25 years, and have never seen the prices fall so low...

Any ideas as to what is going on???

Supply & demand ... Too many sellers, not enough buyers.
Super low scrap prices actually has happened before in the late 50's into the early 70's . The prices were so low, it was unprofitable.
Preservation of old steam and diesel locos were largely thanks to low scrap prices at the time ...

Election year.

History shows this is a cycle that repeats itself, about mid term the economy improves then gradually takes a dive as the election date nears.

Originally Posted by wayne1956

Another issue is fuel prices. When fuel prices fall, so does scrap prices (especially shred) as it does not cost as much to ship from point A to point B, in addition to cutting the cost of creating new steel from ore. OPEC has voted to cut production, so if they keep to that and price of oil goes up, so will fuel and probably shred prices.

fuel and scrap are linked to the global economy. if the global economy is hot the price of oil can not be low. production can just match need with a proper global economy. thats why oil (gas) is still low; its not being utilized to full potential. the same is said for metal. its aa commodity. if global production of things (wether it be commercial buildings, cars, or laptops) is not high enough then scrap is not utilized. I have scrapped a little for a lot of my life and I don't remember 2.5 cent scrap metal prices before even in short down periods in the economy. when was the last time you remember an extended period of time where scrap steel was 2.5 to 3.5 cents for so long? the difference is the length of the period of the repressed economy.

the difference is OIL production can be cut enough to produce high oil prices without the global economy actually being stronger but scrap metal is a thing of industry. The price paid for scrap may go up a bit with the price of oil but its main driving force must be economic

It's easier for people to understand .... higher prices at the pump mean higher prices at the scrapyard.

It's really more about energy prices. See, metals of all kinds are energy intensive. That's the real link.

There's global demand too of course.

The question is ..... is this what a normal,healthy, economy should look like ? Perhaps all of the debt spending (robbing of the future) overstimulated the global economy.

everything seems to be in cycles, I just load up and go

Originally Posted by Scrappah

I've got nothing against Mr. T but i don't think it's a betrayal to say that he doesn't have an in depth understanding of the issues. Like a lot of leaders he hits the high spots and leaves the details to his subordinates. He would probably farm the job of managing the economy out to the person that he appoints as the Chair of the Federal Reserve. Hopefully, he puts somebody in charge that knows what he's doing and stays out of his hair.

Let's say the fed lowers interest rates to stimulate borrowing. That puts more money in circulation and devalues the dollar. That heats up consumer spending,job growth, and price inflation.

It was precisely those factors that led up to the recession that hit over the winter of 2007-2008 and the bank meltdown that followed shortly afterward. We really haven't recovered from that setback yet.

It's like going to a wild party and really tying one on. It's fun while it lasts but you feel awful come the morning after.

There's something to be said for a quiet night at home, early to bed, and off to work the following morning. The economic gains come hard, and they come slowly, but they represent real economic growth.

Inflating / devaluing the currency only robs from the future to make things look pretty today. This doesn't represent sustainable economic growth or the creation of jobs that pay a living wage.

See ... the yearly raises that the average American gets never keep pace with the increased cost of living. It's a slipping down life. Every year it's a little bit less and a little bit less. After 20 or 30 years of faithful service to their employer they end up making half of what their starting pay was.

Maybe that's a good thing for a select few employers like Mr. T but it's bad for everyone else. It's bad for the economy too because it's the little guy that drives consumer spending.

Does this make sense ?

Not going to work, consumer spending is not the ticket out of this mess.

When we go into the forest to harvest wild mushrooms we drill many holes into our pails. The purpose of the holes is to allow spores from our picked mushrooms to escape to assure there will be future pickings. With HRC she leaves nothing behind for the future.

Does this make sense ?

Originally Posted by alloy2

Not going to work, consumer spending is not the ticket out of this mess.

When we go into the forest to harvest wild mushrooms we drill many holes into our pails. The purpose of the holes is to allow spores from our picked mushrooms to escape to assure there will be future pickings. With HRC she leaves nothing behind for the future.

Does this make sense ?

Honestly, i think you are looking at this through the lens of the upcoming election. I've got no interest in that. Literally shut off the tv a couple of months ago. Too many loud people .... i've got no taste for that kind of thing. I do get that others are caught up in it though. Fortunately, it will all be over soon.

I'm really more interested in the mechanics of the economy. Economics aren't political. We had a gent by the name of Alan Greenspan who served with distinction as the chair of the Federal Reserve across many different administrations. He vacated his post sometime in the 2000's and the economy hasn't been going very well since. I suspect that the administration of that time directed him to do something that he strongly disagreed with ... and that's why he stepped down. The thing is that when you're serving at a high level like that .... you don't get to badmouth the boss on the way out the door. It's one of the rules of the game.

The question is what's broke with the economy and how do we fix it ? How do we avoid making the same mistakes over and over again ?

If we keep it real, we know what economic policies got us into this mess. We also know that current economic policies aren't doing very much to help improve the situation.

You would be surprised. I've read your posts and we're really not all that much in disagreement.

Any idea why scrap prices are horrible ? The simple answer is that it's the economy.