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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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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 dealers and 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)