Financial crisis hits scrap metal market

Metal recycling workers in Wairarapa are being axed as scrap prices hit rock bottom across New Zealand in the wake of collapsing global markets.
Scrap Metal Recyclers co-owner Viv Lory said the Masterton company has already laid off three workers with another yet to go from an original team of seven "since prices absolutely plummeted" on the heels of the global credit crunch in August that also savaged international metal markets.
"Non-ferrous (metal) is still holding some value but heavy and light gauge steel is only worth stockpiling, which is all we can do with it right now we're just trying to stay open."
Mrs Lory and husband Andrew started trading in scrap metal at their Lincoln Road premises three years ago, with the family company fortunately buoyed through an electrical repair business and engineering operation they also run from the same site.
She said the couple invested over the past year in a metal crushing unit imported from China and a 29-tonne front-end loader that replaced a failed machine "and the lay-offs had to happen because we've still got those bills to pay".
Wairarapa Scrap Metals owner Terry O'Brien said he employs eight workers at his Masterton recycling business and another three at a scrap metal firm he runs in Hawke's Bay "where business really is dead right now".
He said there is "a very strong possibility" he will soon be forced to lay off workers at both sites, including the Ngaumutawa scrap metal yard that he opened 23 years ago.
"The market has crashed quite significantly and this is the worst I've ever seen it," Mr O'Brien said.
"I've been through downturns before but nothing quite as quick or harsh. Prices went from record highs to record lows and the only good thing to come out of it is that it might stop the bloody thieving.
"Everything's gone quiet but there's still markets if you want to sell for next to nothing. And closing up shop is not an option I'm even considering. We're still buying the trick is to get it low and hopefully sell high."
Lance Thornton, owner of Masterton firm Thornton Scrap Metals, said his business is "sitting all right" despite the price collapse and his company is still buying scrap metals.
Trevor Munro, president of the Scrap Metal Recycling Association of New Zealand, said Wairarapa produces about 6000 tonnes of recycled ferrous metal and 600 tonnes of non-ferrous metal a year.
The three Masterton businesses will each have to "cut overheads, hone efficiencies and weather the storm" alongside every other scrap dealer in the country, he said.
"The credit crunch means international buyers have no access to money. And on the flip side, consumers aren't buying the markets just aren't there today and nothing can be made without metal."
Mr Munro said prices paid for recycled ferrous metals have fallen 85 per cent to about 5 cents a kilo and prices paid for non-ferrous metals, including copper, have plunged 75 per cent to $3.50 a kilo.
"It happened really quickly over the first two weeks of August and prices probably won't come back up for at least another 18 months yet.
"I've been in the business for more than 20 years and seen a few slow downs but nothing this bad," he said.
"We can still buy and we can still sell but the markets are very limited. The bigger boys will swallow up smaller operations and survivors will have to trade among ourselves.
"We're the hydraulic damper for the western economy but what's happening is out of our control."