Download - Buying and selling scrap metal ferrous processing and trading

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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 this requires processing prior to recycling (remelting).

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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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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 dealers and overseas consumers less dependent on export docks

• Carriers

– Truckers and Railroads

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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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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)