Bottom Drops Out of Scrap Metal Industry

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In 2008, a recycler in Tulsa, Okla. paid 85 cents per pound for aluminum cans, but the going rate for 2009 has dropped to less than half of that amount. According to Michael Patton, executive director of the Metropolitan Environmental Trust in Tulsa, the decrease is directly related to the economic recession.

Patton says the “bottom has fallen out of the scrap metal industry.” The demand for metal has disappeared due to the decrease in construction, a drastic change from the metal scarcity in Tulsa just two years ago.

Aluminum can prices have dropped to 25 cents per pound in Oklahoma. Photo: Greendogpetsupply.com

Aluminum can prices have dropped to 25 cents per pound in Oklahoma. Photo: Greendogpetsupply.com

“This is related to the economy and demand issues in the home construction industry. An amazing amount of aluminum, steel and copper is used in home and commercial building construction,” Patton tells Tulsa World. “But this construction isn’t happening in America.”

Over the past five months, the prices for aluminum have fluctuated. In December, January and February, the price dropped to 15 cents per pound and is now steadying itself at approximately 25 cent per pound.

But Patton says this price “rollercoaster” is not necessarily a bad thing. It helps expand the use of material because entrepreneurs will have to think of news ways to use aluminum cans. On average, a recycled aluminum can is converted back into a usable beverage can in 60 days.

American Recycler is reporting the same sentiment of hope. The news outlet says although there are mixed opinions on the state of the scrap metal market, there are signs of life. Some believe that scrap metal prices have hit the bottom, and are now slowly recovering. However, metal recyclers are still holding tight on operation costs and “holding their breath.”

In addition to the economic recession, severe weather may also have an impact on the compounded shortage reported in many parts of the country. Also creating controversy in the scrap metal industry is the recent “Buy American” provision passed in January. The bill would mostly ban foreign steel and iron from projects laid out by the $819 billion economic package. However, it is still unknown just how the provision will be carried out or what effect it will have on the scrap metal industry.

For the most part, industry heads are confident that the scrap metal industry is on its way to recovery, in spite of its shaky state. Domestic and foreign government bailouts and guarantees will eventually awaken the economy, and consumers will start buying, creating more jobs.

“We are cautiously optimistic that infrastructure spending in the United Sates, in China and other countries will help jumpstart prices and demand for our commodities,” says Bruce Savage, vice president of communications at Institute of Scrap Recycling Industries. “Our theory has always been it’s not a question of if it will rebound, it’s a question of when.”

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