Salvage Yard

SCRAP METAL INDUSTRY

Increasing demand for metals

RIO DE JANEIRO – Brazilian miner Vale on Thursday predicted continued growth in metals markets driven by strong demand from China and global economic recovery, a day after reporting a year-to-year profit loss of 65 percent.

Vale, the world’s largest iron ore producer, on Wednesday reported third-quarter earnings of $1,68-billion, down from the commodities boom highs of last year but more than twice that of the previous quarter.

“The global economic recovery is likely to be sustainable, in our perspective the downside risks are diminishing,” said Vale Chief Financial Officer Fabio Barbosa in an earnings conference call. “We continue to be extremely confident in the future of our company.” He said much of this growth has been driven by emerging market economies, and expects particularly strong demand growth from China, the world’s top steel producer and largest importer of iron ore. (MINING WEEKLY via Reuters, October 29, 2009)
The above sentiments are supported by Bloomberg.com reporting October 30, 2009: “Commodities headed for the biggest monthly gain since May as economic growth increased speculation that demand for food, energy and metals will rebound.

The Standard & Poor’s GSCI Index of 24 raw materials is up 9.9 percent for October…

China, the world’s largest buyer of commodities from copper to cotton, will sustain its economic rebound this quarter and growth is likely to top the government’s 8 percent target for 2009, the central bank said today. The U.S. economy, the world’s biggest, expanded for the first time in more than a year in the third quarter, the Commerce Department said yesterday.

Cooper erased last month’s drop and is up 7 percent for October. The three-month contract fell 1.1 percent to $6,589 a ton on the London Metal Exchange. Aluminum fell 0.6 percent to $1,940 a ton, for a monthly gain of 2.7 percent. The price of aluminum is up 26 percent this year, the least among the six main industrial metals traded on the LME.”

No one knows how the recovery will unfold, but all indications are that demand for metals is currently on the rise. Managing your metal recycling operation to meet both the current pricing challenges AND positioning for economic recovery is challenging. EAGLESHARP can help.

CONSOLIDATION

In spite of recent months of consolidation, the industry leaders are predicting further consolidation in the scrap metal markets. The following are excerpts from the Dow Jones Newswires, September 15, 2009 in which Dan Dienst, chief executive of SIMS Metal Management made the case for future consolidation:

“There will be a culling of weak and inefficient (companies) from the herd” and SIMS will use the opportunity to “assert itself in the marketplace”

Mr. Dienst said there are some positive signs within the scrap metal market, including pent-up demand, and he expects improved results (for SIMS) in the year ahead.

Mr. Dienst remains cautious on the likely pace of recovery despite the global economy being “better than it was.”

“We’re not betting the company on a rock-and-roll V-shaped recovery,” he said.

Larger salvage companies do enjoy a certain “economy-of-scale” in this industry. And larger companies continue to acquire smaller companies in part because of increasing challenges to securing land for yard operations. EAGLESHARP can assure that your scrap metal company has the profile to maximize sale/merger results, should you decide to take advantage of present realities.

PROFIT FOCUS

In any event, the success you achieve in deriving profit from your present business depends on a variety of factors, some operational, some financial and administrative and some factors are of a marketing/sales nature. ES has experience in all areas of scrap processing and sales and can orchestrate solutions to the constraints that limit your profits. ES defines constraints and offers solutions in straight-forward, no nonsense terms. Sorry, no fancy reports from ES; just a simple ACTION PLAN that fits the resources you have available. You decide to the degree that you need ES assistance in implementing the ACTION PLAN.

Affordable salvage yard consulting from ES makes use of technology to limit the high cost of travel. And the ES long-term approach to consulting spreads cash outlays over years. (No one else in the consulting world takes this common sense approach.) ES will present a quote for consulting services up front that fits both the overall ACTION PLAN and meets your definition of “doable”.

By completing and submitting the confidential questionnaire or easy contact form you will enjoy a free ES response that briefly profiles your business in terms of strengths and possible constraints to your viable future. ES is convinced that once you see the clear way that professional management can define your business situation, you will opt for ES as your long-term management partner. Please take initiative and contact us for a no obligation free consultation.