Steel demand calls for scrap

The state’s steel recycling industry is reaping the benefits of price hikes resulting from burgeoning international and local demand, with a flurry of scrap metal sales significantly lifting activity in the sector. 

According to Paul Williams, director of Armadale-based metal and machinery specialist Australian Consolidated Metals and Machinery (Auscon), the steel price increase has improved his business significantly.

“I’d say we’ve probably gone up about 20 to 25 per cent in the past year; it’s a fair increase,” Mr Williams said.

Anecdotal evidence of farmers bringing in steel scrap for recycling was a reality, he said, with the business barely able to cope with demand for its site collection service.

“Probably over the last few years we’ve had a lot more response from farmers. Twenty years ago, nobody would part with it. Nowadays, they’re ringing every five minutes,” he told WA Business News.

“In a normal week, we’d have about 25-30 private individuals coming in, with loads ranging from 500 kilograms up to 25 tonnes.”

Smaller skip loads of up to 300 kilograms account for a further 50 deliveries a week on average, with additional customers supplying non-ferrous metals.

Prices for steel scrap range from $40 to $140 per tonne, depending on quality and grading.

Mr Williams said while the opportunities appeared limitless, the business was constrained by its size and infrastructure, with three trips to the country by road trains the maximum possible each week.

“The transport side of the business is the most difficult,” he said. “Plant operators and truck operators are in high demand.”

One of the largest companies in the industry, Smorgon Steel, has expanded its source base for scrap metal by rolling out a national campaign to collect material from farmers.

Called ‘The Smorgon Steel Great Scrap Round-Up’, the campaign pays cash or Smorgon Steel bucks (credit) for farmers’ scrap metal.

Bruce Loveday, executive general manager of corporate and investor relations at Smorgon Steel, said the campaign had been very successful so far.

He said that while higher steel prices were not the cause for the campaign, increased demand for all raw materials had provided a strong market for scrap.

“As prices go up, the incentive to try and find more and more raw material becomes more acute,” Mr Loveday said.

“Would we have done it if prices were lower? Maybe, but we may not have been as enthusiastic about it.”

Western Australia has provided about 18 per cent of the total scrap collected so far, behind Queensland and Victoria, and about equal with New South Wales.

About 6,000t of scrap are collected around Australia each month, with 10,000t collected to date in WA.

The scrap collected during the campaign will be used to make steel, with some to be sold to competitors OneSteel and BlueScope, or exported.

Smorgon has also donated $750,000 to rural volunteer firefighting brigades, donating $15/t of scrap received from the campaign.  

Each year, Smorgon melts almost one million tonnes of scrap metal to make new steel.

The majority of scrap material is sourced from building demolitions, off-cuts from the manufacturing industry and end-of-life whitegoods and cars.

Mr Loveday said the scrap round-up campaign was an additional source of material.

“The cost to us is almost the same as other sources of material,” he said.

Other companies are investing in infrastructure to protect their own sources of scrap material.

In March this year, resources industry supplier, Bradken, acquired a specialist foundry scrap metal supplier in WA to secure supply and reduce input cost of scrap metal.

The Cannington-based facility supplies raw materials to the company’s two WA foundries. 

Bradken mineral processing general manager Brad Ward said the acquisition was important to the company’s structure.

“We wanted to bring supply in-house, to get security of supply and more efficient supply,” he said. 

Bradken sources most of its scrap material from the engineering and fabrication markets, mine sites and some established scrap dealers.

The state’s steel recycling industry is reaping the benefits of price hikes resulting from burgeoning international and local demand, with a flurry of scrap metal sales significantly lifting activity in the sector. 

According to Paul Williams, director of Armadale-based metal and machinery specialist Australian Consolidated Metals and Machinery (Auscon), the steel price increase has improved his business significantly.

“I’d say we’ve probably gone up about 20 to 25 per cent in the past year; it’s a fair increase,” Mr Williams said.

Anecdotal evidence of farmers bringing in steel scrap for recycling was a reality, he said, with the business barely able to cope with demand for its site collection service.

“Probably over the last few years we’ve had a lot more response from farmers. Twenty years ago, nobody would part with it. Nowadays, they’re ringing every five minutes,” he told WA Business News.

“In a normal week, we’d have about 25-30 private individuals coming in, with loads ranging from 500 kilograms up to 25 tonnes.”

Smaller skip loads of up to 300 kilograms account for a further 50 deliveries a week on average, with additional customers supplying non-ferrous metals.

Prices for steel scrap range from $40 to $140 per tonne, depending on quality and grading.

Mr Williams said while the opportunities appeared limitless, the business was constrained by its size and infrastructure, with three trips to the country by road trains the maximum possible each week.

“The transport side of the business is the most difficult,” he said. “Plant operators and truck operators are in high demand.”

One of the largest companies in the industry, Smorgon Steel, has expanded its source base for scrap metal by rolling out a national campaign to collect material from farmers.

Called ‘The Smorgon Steel Great Scrap Round-Up’, the campaign pays cash or Smorgon Steel bucks (credit) for farmers’ scrap metal.

Bruce Loveday, executive general manager of corporate and investor relations at Smorgon Steel, said the campaign had been very successful so far.

He said that while higher steel prices were not the cause for the campaign, increased demand for all raw materials had provided a strong market for scrap.

“As prices go up, the incentive to try and find more and more raw material becomes more acute,” Mr Loveday said.

“Would we have done it if prices were lower? Maybe, but we may not have been as enthusiastic about it.”

Western Australia has provided about 18 per cent of the total scrap collected so far, behind Queensland and Victoria, and about equal with New South Wales.

About 6,000t of scrap are collected around Australia each month, with 10,000t collected to date in WA.

The scrap collected during the campaign will be used to make steel, with some to be sold to competitors OneSteel and BlueScope, or exported.

Smorgon has also donated $750,000 to rural volunteer firefighting brigades, donating $15/t of scrap received from the campaign.  

Each year, Smorgon melts almost one million tonnes of scrap metal to make new steel.

The majority of scrap material is sourced from building demolitions, off-cuts from the manufacturing industry and end-of-life whitegoods and cars.

Mr Loveday said the scrap round-up campaign was an additional source of material.

“The cost to us is almost the same as other sources of material,” he said.

Other companies are investing in infrastructure to protect their own sources of scrap material.

In March this year, resources industry supplier, Bradken, acquired a specialist foundry scrap metal supplier in WA to secure supply and reduce input cost of scrap metal.

The Cannington-based facility supplies raw materials to the company’s two WA foundries. 

Bradken mineral processing general manager Brad Ward said the acquisition was important to the company’s structure.

“We wanted to bring supply in-house, to get security of supply and more efficient supply,” he said. 

Bradken sources most of its scrap material from the engineering and fabrication markets, mine sites and some established scrap dealers.