The industry is expected to experience a less volatile period as metal prices settle down.
Los Angeles, CA (PRWEB) October 30, 2013
The Scrap Metal Recycling industry has been exposed to the full force of the global economy over the past five years. The industry collects and processes both ferrous and nonferrous metals, which are then sold to steel mills, foundries and other industrial consumers to produce new metal products. Scrap metal recyclers have an important role in both the domestic and global metal markets. The United States is the world's largest producer of scrap metal, where it accounts for about half of the country's metal production. However, wild swings in global commodity prices have had a large impact on both revenue and profit over the past five years. For example, revenue tanked in 2009 when the world price of steel, aluminum and copper declined. While the industry quickly rebounded in 2010 and continued to improve through 2011 and 2012, domestic and international demand conditions have softened, and the industry has yet to reach its prerecession high. Over the five years to 2013, the industry is expected to decline, and during this year, industry revenue is expected to slide slightly, due to reduced demand for exports and slowing domestic nonresidential construction.
According to IBISWorld Industry Analyst Andy Brennan, “The Scrap Metal Recycling Industry industry exhibits a low level of market concentration, which can be attributed to the industry being highly fragmented.” In 2013, the four largest firms (including Sims Metal Management Ltd., Commercial Metals Co., Schnitzer Steel Industries Inc. and Metalico Inc.) generated a little over 10.0% of total industry revenue (see IBISWorld report OD5391 for major player market shares). As a result, the industry comprises several small-scale and independently operated firms scattered throughout the United States. Many firms collect scrap metal from a variety of sources, including junk cars, obsolete machinery and appliances and construction waste, which enables many small and independently operated firms to enter the industry and cater to a geographically-specific niche market. While operating large distribution networks allows companies, such as Sims Metal Management, to collect and recycle large scrap metal quantities, small firms can still utilize automation to operate efficiently and retain modest profit margins.
Looking ahead, “the industry is expected to experience a less volatile period over the five years to 2018, as metal price fluctuations settle down,” says Brennan. Although demand from China is slowing, scrap metal recycling in the US remains an important source of supply for developing countries that need both ferrous and nonferrous metals to supplement their development. As the industry matures, IBISWorld expects the trend towards consolidation to intensify. Over the next five years, merger and acquisition activity will heighten as the industry follows a similar pattern to the primary metal industries, such as steel manufacturing. Over the five years to 2018, industry revenue is projected to increase per year on average.
For more information, visit IBISWorld’s Scrap Metal Recycling in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Scrap Metal Recycling industry are engaged in the collection, processing and recycling of ferrous metals, like iron and steel, and nonferrous metals such as aluminum, copper and nickel. The typical recycling process involves sorting, shearing, shredding, torching and baling scrap metal to be sold to downstream metal smelters for further processing.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
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Barriers to Entry
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