Scrap metal no longer hot item

David Cauble, vice president of Cimco Recycling in Milwaukee, says the scrap metal market is cyclical. "No one can really see where the bottom's at," he adds.

MILWAUKEE -- Ron Loos says he recently received $112 for a bin full of scrap metal that, not long ago, would have sold for about $600.

Loos said if the price drops much more, he might have to pay someone to haul away the scrap material from his business, Quality Tool & Die, based outside Milwaukee.

"It's a big change from a couple of years ago," he said, when people were stealing all kinds of metal because it was so valuable.

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Scrap metal is a key ingredient in the manufacturing of new products. A global clamor for it has resulted, at times, in high prices and extreme actions -- such as the theft of cars for their metal value.

Now, with a slowdown in the global economy, scrap metal prices have plummeted. Material that sold for $220 per ton in January, for example, now sells for about $80.

A few years ago, scrap metal from the United States was one of the top exports to China, where it was melted and manufactured into new products.

Now that China's economy has slowed and industrial activity is down in other parts of the world, there's less demand for raw materials.

"It's a world economy now. What goes on in China affects what happens in Milwaukee," said Jeff Isroff, CEO of United Milwaukee Scrap, a metal recycler in Milwaukee.

The strength of the U.S. dollar, relative to foreign currencies, has made the situation worse for scrap-metal businesses.

"But probably the biggest factor has been supply and demand. The fact of the matter is the supply has outpaced the demand worldwide," Isroff said.

Prices for aluminum, copper, nickel and other materials have slid.

Steel mills that paid about $330 per ton for steel scrap in January, paid $165 in October.

"To say that the ferrous scrap metal market has collapsed, from a pricing standpoint, would not be hyperbole," Isroff said.

The scrap metal industry isn't going away, but individual businesses have closed or consolidated with others, including some that were in the Milwaukee area for decades.

Prices are likely to get worse before they get better, according to industry experts who say they don't expect much of an improvement until 2017.

"It's a cyclical market. No one can really see where the bottom's at," said David Cauble, vice president of Cimco Recycling, in Milwaukee.

"This is a difficult time. You have to be smart and manage your money ... and realistically, if you are just starting to do that today, it's too late," Cauble said.

Some businesses have stored scrap material while they wait for the price to rebound.

That's almost like trying to predict stock market prices, however, and most businesses can't afford to store material for too long.

Cimco has eight scrap metal yards. Cauble says the company has learned to weather the downturns that come periodically.

"We know that if we get metal in, and ship it out, we make money every month," he said.

Some scrap metal businesses say they were getting about three times more for the material a year ago, and now they're hesitant to spend much time and money on cleaning up yards filled with scrap metal.

"It's getting to the point where you almost have to charge people," to haul it away, said John Marty, co-owner of Anything Goes Salvage, in Waterloo, Wis.

While the prices are down, he's spending more time buying and selling old tractors and parts for tractors, including sales on eBay.

As for scrap metal: "If you can buy it cheap, then it's all right," Marty said.

People who make a living scavenging scrap metal are also struggling, sometimes getting about $20 for a pickup truck load of material they gathered from the trash.

"It seems like there are fewer 'scrappers' out there. I have heard guys talking about the prices being off, and that has made it less worth their time," said Tim Nelson, a pastor at Transformation City Church, in Milwaukee, who knows metal collectors in his neighborhood.