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Ferrous Processing & Trading

Buying and Selling

Scrap Metal

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Understanding the Ferrous Scrap Market

Scrap Sources

Mill or Revert Scrap

Produced within the steelmaking operation

Prompt Industrial Scrap

Produced at manufacturing plants: blanking, punching, stamping,torch cutting, machining, rejections

Obsolete Scrap

Consumer and industrial discards of old steel-bearing buildings,structures, machinery, autos & consumer goods. Virtually of thisrequires processing prior to recycling (remelting).

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Understanding the Ferrous Scrap Market

Players in the Scrap Market

Scrap Generators

All of us..focusing here on automotive manufacturing plants

Scrap Collectors, Processors, Dealers

Compete with each other for raw material

Convert (process) as required to meet consumer specifications:

Reduce piece sizing: torching, shearing, shredding

Increase piece sizing: baling, briquetting

Increase bulk density: baling, shredding, briquetting

Improve metallic yield: shredding, shearing, hand sorting

Reduce tramp metals: shredding, shearing, hand sorting

Agglomerate / blend parcels for shipment

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Understanding the Ferrous Scrap Market

Players in the Scrap Market (cont d)

Scrap Brokers

Act as principals in scrap sales (taking ownership & selling)

Deal with a number of consumers and dealers

Provide fluidity of month-to-month scrap movements to

accommodate local & regional changes in supply / demand Exporters

Historically provided dock facilities for moving bulk cargos

New trends in containerized scrap shipments make domestic dealersand overseas consumers less dependent on export docks

Carriers

Truckers and Railroads

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Understanding the Ferrous Scrap Market

Players in the Scrap Market (cont d)

Consumers

Steel Mills

Conventional Integrated Steelmakers

Iron ore-based (80% hot metal, 20% scrap)

Historical buyer of automotive scrap (bundles)

No new mills in the US since 1962

Electric Furnace (Mini-mill) Steelmakers

100% Scrap or Scrap Substitutes

Major investments in flat-rolled market

Primary buyer of automotive scrap today

Foundries

Iron and Steel Castings

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Understanding the Ferrous Scrap Market

How the Scrap Market Works

Consumer versus supplier driven.scrap is bought, not sold

Suppliers have no long-term pricing power or control

Scrap is not manufactured, it is processed

No commodities exchange to establish pricing or futures

Economies of scale work in reverse:

Higher volume = Higher unit pricing

Price Elasticity

Obsolete scrap price elasticity perhaps .3 (10% price increase =3% increase in supply)

Industrial scrap is price INELASTIC

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Scrap Grades

Stamping Offal

Produced by stamping and blanking operations

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Scrap Grades

Stamping Offal-based Grades

#1 Bundles (Bales) from

Onsite or Offsite Baling Operation

Clipress (Busheling) from

Onsite Clipress Operation

#1 Busheling

Blanking or Punch Presses

#1 Shredded Clips from

Offsite Shredding Operations

RamPress Wafers from

Onsite RamPress Operation

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Scrap Grades

Machining-based Scrap Grades

Machine Shop (Steel) Turnings

Machining of Steel

Cast Iron Borings

Machining of Cast Iron

Hot Briquettes produced from

Cast Iron Borings

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Scrap Grades

Obsolete Scrap Grades

Scrapped Autos

Miscellaneous Unprepared

(Tearouts, demolition, etc)

#2 Shredded Auto Scrap

(Fragmentized)