Despite the volatile economic activity across the global markets, the outlook for the sector remains positive as the demand for scrap metal grows among both domestic and global consumers.

Steel is the most recycled material worldwide. In 2010 in the U.S., 74 million metric tons of scrap steel were processed by the scrap recycling industry, representing a U.S. ferrous scrap market value of over $22 billion. The U.S. is the largest exporter in the world, shipping ferrous scrap to over 90 countries around the world including China, South Korea, Turkey, Taiwan and India, with Turkey being the largest importer of scrap steel.

Besides growth in steel demand, a large contributor to demand for steel scrap involves the rate at which producers use scrap steel to produce steel. China, now the world’s largest steel producer, has contributed to the reduction in the global percentage of scrap steel used to produce steel, from 43.9 percent in 2000 to 37.5 percent in 2010. However, China’s scrap steel usage is expected to increase significantly by 2015 according to the country’s five year plan.

Scrap steel is processed into a commodity grade material and used to produce over 75 percent of raw steel in the U.S. Some of this steel gets recycled again, further extending the economic and environmental benefits.

With the use of scrap steel, CO2 emissions are reduced by 58 percent versus steel produced from raw ore. Furthermore, manufacturing steel using scrap steel requires 60 percent less energy than producing it from iron ore.

Nonferrous metals do not lose their chemical or physical properties in the recycling process, allowing these metals to be recycled an infinite amount of times. In the U.S. alone, the value of the nonferrous scrap industry rose to almost $40 billion, which is a 28 percent increase from 2008 to 2010.

The scrap recycling industry remains highly fragmented, with the top 20 companies controlling about 35 percent of the sector. In the U.S. there are well over 500 independent recyclers with more than 1,000 operating locations, and many of these are family operated.

The industry is characterized by high barriers to entry due to strict government regulations, the high price of capital equipment and the value and scarcity of land required to process scrap in some regions.

Larger recyclers are expanding, and consolidation is expected to continue in this fragmented setting. For example, SIMS Metal Management was particularly active globally in 2011, closing a total of eight acquisitions in various global locations. In April of 2011, Schnitzer purchased American Metal Group of Los Angeles, California. This acquisition enhanced Schnitzer’s supply network in Northern California and expanded metal recycling operations in that region.

On November 28, 2011, Icahn Enterprises put in a bid to acquire the remaining 90 percent it did not own of Commercial Metals, offering $1.73 billion (total enterprise value $2.91 billion). The offer price of $15 per share from Icahn Enterprises LP represented a premium of 31 percent. This offer valued the equity at 7.0x LTM EBITDA. This offer has recently been formally withdrawn by Icahn after failing to win the level of support they had sought from other shareholders.

Improving economic conditions and demand from developing countries will continue to drive the growth in the scrap metal sector. Mergers and acquisitions will continue as producers seek to build scale and drive profitability. These trends are important to consider in maximizing the value of a business in this sector.

WHAT IS BEING PROPOSED – BUT WILL ACTUALLY RESULT IN WORSE CONDITIONS?

Cash Ban-Note: already partly in place

-Driving ‘crooks’ underground to cash only ‘Consolidators’ or Rouge Recycling Centers that bring to other major Recycling Centers. No ability to track material or ‘crooks’.

-No photo ID, images of material, or photos of people at ATM.

-Lawful Recycling Center buyers can reject stolen material, or collect all of the above information that others do not.

-Check Fraud already a growing issue, will only get worse.

-Delayed payments; putting in mail, are a one-time only delay.  For example: person that comes in daily, after first three day delay will then get checks daily.

-Cash ban in Minnesota has not resolved any issues. And Nationally there has been ZERO evidence that a cash ban is effective to combat scrap theft.

Despite the fact that we do issue checks, we agree that as a requirement to ALL companies – checks are too onerous to require! The cost to process a check is Enormous:

-Stamp

-Envelope

-Labor to stuff envelop

-Labor to “stamp” envelope

-Rental of “stamp” machine in some cases

-Labor dealing with arranging hundreds of envelopes in mail each day; may require travel to post office; fuel, time, etc.

-Laser printers

-Laser printer ink

-Labor to file copy of check

-Cost to store checks

-Cost of check from check printing company

-Cost to process check at bank

-Labor to deal with returned checks-find correct address

-Cost of ‘Overnight’ printing of checks and airfreight, when check fraud happens

-Labor to reconcile checking account monthly

-Labor to deal with lost checks that customers report

-Cost of replacement check, etc., etc., etc.

-Cost to stop checks that are lost

-Labor and good will lost with person saying not their signature, but seems to be theirs

-Labor and check cost in dealing with person that has outdated check and needs a new one

Mailing one check could cost as much as $1.25-$1.50 each!!!

Larger Recycling Centers process 600-1,000+ transactions per day

Assume just 400 and assume just $1.35 per transaction

400 transactions x $1.35 cost per check x 6 days x 52 weeks=$168,480/yr!!!

ALSO

-Additional “Hidden” costs of check fraud will be paid by Banks and U.S. Secret Service, which will be passed on to businesses and consumers.

To put it lightly, the people behind this legislature see this issue with our communities from one side, and one side only. Increasing these requirements on recyclers will only solve problems in theory, and very loose, generalized theory at that. Other states have enacted very similar guidelines and requirements which have resulted in ZERO measurable or evident benefits to the problem. Why, then, would you follow suit…copy these failed changes…and pretend to have “found the answer” and act as though this will be a fix?

As I regularly look for news-worthy stories to add content to my blog, I’m always on the search for scrap-related news. Believe me when I say, there ain’t much good news out there in this category. A simple search of “scrap metal” on any substantial news website will yield you hundreds of articles covering thefts, convictions, law changes, assaults, even rapes…and each of which somehow has scrap metal tied into it. In an industry with so much tied into it…it’s amazing that all you ever hear about is the negative sides!

Are there thieves who steal scrap metal? Sure. But as a person who sits at a scrap yard 50+ hours per week…I can tell you the vast majority of our customers are honest, hard-working Americans who have been hit by our economy and many of which have been “downsized” or lost their jobs due to outsourcing. Refusing to just throw in the towel and watch their way of life dwindle away with the American economy, these “scrapyard soldiers” have grabbed the bull by the horns, and paved their own way to continuing to put food on the table, pay their kids way through college, keep their families in their homes, and all other sorts of honest, admirable causes I’ve heard from countless customers.

And what of the recycling benefits of scrap yards? It is common knowledge the vast majority of items that make their way into our yards is retrieved from curbs, dumpsters, and sources which otherwise would find these items making their way to landfills and dumps. Here’s a little food for though, pertaining to recycling steel alone:

• Each year, North America recycles more steel than plastic combined.
• Americans use 100 million steel cans every day.
• The steel industry has been recycling for over 150 years.
• The steel industry’s largest source of raw material is scrap metal.
• Recycling steel saves 75 percent of the energy that would be used to create steel from raw materials, enough to power 18 million homes.
• Over 65 percent of the steel produced in the U.S. is recycled into new steel every year.
• One ton of recycled steel saves 2,500 pounds of iron ore, 1,400 pounds of coal and 120 pounds of limestone.
• Every year the United States saves enough energy, by recycling steel, to supply Los Angeles with nearly a decade’s worth of electricity.
• American throw away (dispose, not recycle) enough iron and steel to supply all the nation’s automakers on a continuous basis.
• A steel mill that recycles scrap reduces related water pollution, air pollutions, and mining wastes by about 70%.

And furthermore, some other astonishing facts regarding other types of scrap metals:

• Recycling 1KG of Aluminum saves up to 6KG of bauxite, 4KG of chemical products, and most importantly 14 kwh of electricity.
• A recycled Aluminum can saves enough energy to run a television for three hours.
• Recycling aluminum saves 95% of the energy used to make the material from scratch. That means you can make 20 cans out of recycled material with the same amount it takes to make one can out of new material. Energy savings in 2007 were enough to light a city the size of Detroit for 8 years.
• American throw away (dispose, not recycle) enough aluminum every month to rebuild our entire commercial air fleet.
• Americans use 100 million cans per day.
• When you toss out one aluminum can you waste as much energy as if you filled the same can half full with gasoline, and just threw it on the ground.
• The 36 billion Aluminum cans landfilled last year had a scrap value of 600 million dollars.
• North America is currently recycling 2/3 of aluminum cans, no where close to the amount we should be recycling.
• America alone, uses 80,000,000,000 aluminum cans every year.
• Making cans from recycled aluminum cuts air related pollution by 95%.

Nation – and even world – wide there are legislatures hopping on the band wagon of labeling the scrap metal industry as the Big Bad Wolf. There are all sorts of politicians on every level getting behind the movement of making guidelines and restrictions even more difficult for scrap dealers to conduct business. Labelled as means of “combating scrap theft”, these laws in actuality will raise the costs of conducting business for honest recycling companies, while really not lowering any crime at all. Many of these suggested law changes will ultimately create and increase illegal activity in a whole new realm. Black market scrap companies would be the result, purchasing scrap from the dishonest, ignoring all laws and guidelines, who would then turn around and sell their greater quantities to a legitimate recycler. This would lower the legitimate companies profit margins, coupled with increased costs due to compliance issues with new laws – which, in theory, would result in no changes to criminal activity at all!

Looking at the staggering statistics of the impact the scrap recycling industry has on this country – and the planet – what true cost would there be in running many of these recyclers out of business? At what point does it become the recycler’s responsibility to combat theft and crime? Every customer we receive is required to produce a valid ID, sign a legally binding statement that the materials they are recycling is their own, every transaction has photographs taken of the materials being brought in, and each customer is caught on about 5 different cameras during their time here. I’ve personally dealt with police on numerous occasions regarding a theft, many of which resulted in open-and-shut cases ending in convictions due solely on the evidence we were capable of producing for them. What would result if further restrictions on our business eventually forced us to close our doors? Where would these police officers turn when items came up stolen? Would shutting the doors of the recyclers eliminate theft and thieves?

I know as an employee of a scrap metal recycler, I speak from a place of bias. Similarly, I also speak from a place of knowledge and experience…having seen the entire situation from both sides of things. I would be willing to bet that I as an individual has gained more exposure to this topic than the vast majority of legislative politicians speaking out on the subject. The experience and opinion these people – as well as the vast majority of the general public – has built their opinions and perspective on those same search engine results I spoke of earlier. Pages and pages of articles singing the same song…scrap metal…The Big Bad Wolf!

Another great feature of this program, is simply text the number “77948″, first put the word “SCRAP” in your message, followed by any sort of pricing question and we will respond back with the correct answer immediately! This is great for quick questions on a current price, if we could offer you a better price on your quantity – or any other questions you might have!

A few things to keep in mind while watching this video, however, are his prices are a bit off…and he’s also not interested in hanging onto any steel. As I’m sure I don’t have to tell many of you, steel can be the bread and butter of any scrapper’s earnings!! I wouldn’t be so quick to pitch it to the side!