2. 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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3. 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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4. 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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5. 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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6. 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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7. Scrap Grades
Stamping Offal
Produced by stamping and blanking operations
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8. Scrap Grades
Stamping Offal-based Grades
#1 Bundles (Bales) from #1 Busheling
Onsite or Offsite Baling Operation Blanking or Punch Presses
Clipress (Busheling) from
RamPress Wafers from
Onsite Clipress Operation
#1 Shredded Clips from Onsite RamPress Operation
Offsite Shredding Operations
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9. Scrap Grades
Machining-based Scrap Grades
Cast Iron Borings Machine Shop (Steel) Turnings
Machining of Cast Iron Machining of Steel
Hot Briquettes produced from
Cast Iron Borings
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