The ferrous scrap metal sector within the UK continues to come under pressure as market demand for scrap weakens because of lower iron ore prices.
And, there have been developments at the top two companies in the UK market – EMR and Sims Metal Management – this month.
Sims Metal Management has published its half yearly figures while a major appointment has been made at European Metal Recycling Ltd (EMR).
EMR
At EMR, Bob Garwood, director for southern region, has been promoted to the post of chief executive. His appointment sees him taking on responsibility for the company’s UK operations.
Mr Garwood has been with the company for more than 20 years, joining it when the metal recycling firm Mayer Parry was acquired by EMR in 2000. He is based in Erith, Kent and is well-versed in UK market trends and activities, shipping and in the acquisition of businesses into the EMR Group.
Chris Sheppard, group chief executive officer, who has responsibility for the company’s global operations is expected to continue his global role with an expanded focus on EMR’s growing activities in the United States. He took on the post in January 2012.
One observer said: “While the UK operation of EMR is still very important to the company, there is even greater opportunity for it in the US market.”
Sims
At Sims, which has had a troubled time in the UK in recent years, the company has published its first half results to December 2014 and noted that tonnage turnover is down 10% to 5.5 million tonnes globally.
Sims is a largely Australian-owned business with its headquarters in New York. Chief executive Galdino Claro said that despite the tonnage reduction, the company has however performed better in profit terms through “operating discipline and market initiatives”, which have improved profit by over 50% compared to the prior year.
Mr Claro also highlighted one of the main reasons for the current depressed value of ferrous grades, noting that prices for ferrous scrap are down 15% and iron ore down 25% during the second half of 2014.
Iron ore
The fall in iron ore prices puts pressure on the customers of the ferrous scrap sector because the customers for the material are traditionally electric arc furnaces rather than blast furnaces.
The iron ore price has fallen from about $96 per tonne last summer towards $70 now.
One analyst explained: “The lower iron ore, energy and coke prices are of a big benefit to blast furnace operators because they use much less scrap, perhaps around only 25% of the input compared to electric arc furnaces which use around 80% scrap.”
He added that the export market is in a state of volatility at present because of the uncertainty over whether or not scrap prices would fall further in the wake of steep falls seen in recent weeks.
“Some producers, such as car manufacturers, will keep their scrap moving through but others may sit on material and look to make scrap less available which may have an impact on the market. The situation puts a lot of cashflow pressures on the sector.”
Within the UK this has been a major factor in the reduction of prices for ferrous scrap to as low as £60 per tonne on the gate for light iron in some places.
Source: letsrecycle.com
- metaljunction »
- Metal News
Metal News & Events
METALJUNCTION PUBLICATIONS
Coal Insights (English) Monthly
Coal Insights is a ready reckoner for anyone associated with coal. This publication is aimed at tracking everything related to coal in India.
India Coal Market Watch(English) Monthly
ICMW is a one-stop source for all news, data and research pertaining to coal demand, consumption, stocks, spot- and long-term prices with respect to the Indian Market.
India Steel Market Watch (English) Monthly
ISMW is a brand new high-end steel market report, covering all aspects of the steel industry in India.
Steel Insights(English) Monthly
Steel Insights delves into various facets of the domestic and global steel industry such as market fundamentals, raw material price trends, price forecasts etc.