Recyclers to focus on export market for metals

Metals recyclers say that the decline in UK demand for material which will follow today’s Tata Steel cutbacks will put more pressure on metal recyclers to secure exports in a market where prices for scrap metal have reduced dramatically.

Larger metal recycling companies are expected to consider rationalisation of yards while some smaller firms are expected to struggle. There will also be a knock-on effect on local authorities with the price for steel cans reduced and civic amenity site light iron falling in value to between £25-40 per tonne.

Tata Steel announced this morning that it is to cut almost 1,200 jobs in the UK steel industry. This prompted the head of the British Metals Recycling Association to argue that the government needed to intervene to encourage secondary material markets in what he described as an increasingly “desperate” situation.

The Tata cutbacks come just a few weeks after the SSI steel plant at Redcar in Yorkshire closed its doors with the loss of around 2,200 jobs.

Slump

A number of factors have been blamed for the hits to UK steel production, including high electricity costs. But mainly the sector has failed to compete with a flood of cheap imported steel from China which has led to a market slump.

The situation has been made even worse for metal recyclers because electric arc furnace operators (which use a lot of steel scrap) are facing stiff competition from traditional iron makers using cheaper iron ore which is in good supply.

Commenting on today’s job losses in the steel sector, Mr Hetherington said: “It represents a further major blow to our home market for steel scrap. Our worst estimates mean 20% of our already diminished home market will disappear. Therefore in short this seriously weakens an already weak market for ferrous metals.

“We have got to a sad situation now where something like 80% of our recycled metal will have to be exported. So this is another move to completely undermine the domestic market for recyclables.

“The government and EU provide no incentives for steel makers to use recycled metal. We would like to see more measures being employed to encourage the use of recycled metal, such as an economic pull mechanism, or else it will get more desperate.”