Los Angeles, CA (PRWEB) March 09, 2013
Research continues to demonstrate the efficiencies and cost benefits of using recycled nonferrous metal like copper or aluminum in downstream manufacturing and construction industries. Mandates for the increased usage of certain industry products were put in place in 2011, which enhanced demand for recycled nonferrous metals in particular. However, post-recession downstream demand for nonferrous metals remains low; the industrial production index grew only 0.7% annually on average since 2008. Additionally, foreign producers also ramped up nonferrous metal production, which dented the price of nonferrous metals like aluminum. As a result, the Nonferrous Metal Recycling industry's revenue has decreased 0.6% annually on average to $33.5 billion during the five years to 2013. “High unemployment during the recession curbed consumer spending on manufactured goods that are produced by the industrial sector,” says IBISWorld industry analyst Deonta Smith. Similarly, the residential and nonresidential construction market went from boom to bust. As contractors looked for methods to reduce spending during the recession, recycled products grew in appeal. New building standards and research demonstrating the cost-savings from sustainable materials also bolstered demand for buildings with such features. The industry is benefiting from rising demand for secondary nonferrous metal, with 5.9% revenue growth expected in 2013.
Rising demand for nonferrous recycled metals has encouraged further growth within the industry. During the five years to 2018, the number of operators is forecast to decrease. The growing manufacturing sector will bolster demand during the five years to 2018 as the industrial production index rises. As a result, revenue is projected to grow strongly during this time. Meanwhile, rising competition from foreign producers is forecast to pressure prices for aluminum and other nonferrous scrap metals. According to Smith, industry profitability is forecast to stagnate slightly due to the increased output by such competing foreign firms, lowering product prices. For example, the price of copper is forecast to decline slightly during the five years to 2018 despite rising demand from construction and related industries.
The largest four companies in the Nonferrous Metal Recycling industry generate about 15.9% of industry revenue. Large-scale concentration has not taken place in the industry because the low value-to-weight and large volume of most recycled materials makes them unprofitable to transport. As a result, this factor has limited the geographical range that most businesses operate in. However, government incentives and consumer pressure to use secondary nonferrous metal materials have previously resulted in vertical consolidation with downstream foundries and manufacturers. Such consolidation is most likely to occur when nonferrous metals are hard to acquire and when prices rise because vertically integrated companies then benefit most from in-house nonferrous metal recycling facilities. For more information, visit IBISWorld’s Nonferrous Metal Recycling in the US industry report page.
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IBISWorld industry Report Key Topics
This industry recovers copper, aluminum, lead and other nonferrous metals from scrap and then manufactures the recovered metals into primary forms (e.g. bar, billet, bloom, cake, ingot, slab, slug and wire) through smelting or refining processes.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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