The year 2020 has been highly challenging, as the COVID-19 inflicted terrible damage to the economy resulting in a massive public health outcry across the globe with strict lockdowns. The scrap metal sector was one of the many industries that took a bad brunt of the raging pandemic. However, in North America, the steel and scrap metal price graph has soared to new heights this year, as the performance is extraordinary.
Ferrous scrap costs have jumped in unison with steel prices, as the January 2021 price inflated a record high, varying from $60 to $120 per gross tonne, based on particular scrap qualities and local economic conditions, adding to December 2020 price growth.
As a result, stakeholders in the ferrous scrap industry said that growth prospects in December and January have been among the best they had experienced in recent decades.
Numerous reasons contributed to the year's impressive start, resulting in this staggering record rise of scrap metal price graph, like:
However, the financial, industrial, and commodities market recovery has begun to stagnate due to the proliferation of new COVID-19 strains such as the former Delta and the current Omicron and the unequal rollout of vaccines. Scrap recyclers, in particular, confront many obstacles, including tight labor markets, shipping, and logistical problems, and possibly higher compliance costs and restrictions on trade.
These problems are leading to an increasingly uncertain picture for ferrous scrap industry participants in the short term, even while the overall prediction for the near future continues mostly to be highly optimistic.
The production of steel has increased!
Global steel production decreased an excellent 0.9% in 2020, while North American steel production fell sharply by 17.4 % in the first half of 2020. The trading fell a whopping 4.3%, with the imports down from 23.4 % in 2019 to 19.1 percent.
The current rebound in steel pricing across the market supply chain has contributed to very high marginal profits for some stalwart North American steel manufacturers. For example, Nucor Corp reported that their total net revenue and profit sky-rocketed to $398.8 million in the 2020 final quarter, rising from the earnings of $193.4 million in the third quarter of 2020 and $107.8 million for the 2019 last quarter.
Demand for scrap metals is growing!
During late 2020, domestic steel mill demand continued to improve while overseas shipments were relatively healthy for ferrous scrap recyclers. The need for US ferrous scrap exports edged up in 2020, primarily due to a better trade volume in the key markets like Asia, Sub-Saharan Africa, and Mexico, and had helped in the rise of scrap metal price graph, an 11.1 percent increase compared to the previous financial period.
The future looks positive despite the risk!
The pandemic is still sweeping across the modern world, causing severe economic hardship across the United States and other countries. The recovery speed of the economy is still painfully slow though it has moderated in the past few months, as still some sectors are deeply affected by the COVID-19.
Although COVID-19 remains an uncertain threat, most economists are still predicting better days, and possibly this might keep the scrap metal price graph in good stead, which should help in the demand and growth.