Perspectives

Houston Scrap Market in Hurricane Aftermath

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The Houston scrap market is now seeing an influx of metal hitting its facilities as an estimated 600,000 vehicles as well as other miscellaneous items were damaged in the floods that resulted from Hurricane Harvey.

In the most recent months, the southeastern U.S. has experienced a series of hurricanes and massive flooding.  The scrap market right now is stable and is at a balance point for pricing. However, this could change as we start to see the effects of the areas that were hit the hardest.  Right now businesses are just starting to get back on their feet especially in the Houston area.

Dennis Laviage runs one of the top scrap yards in the Houston area and the aftermath of Harvey has bowed well for his business.  Laviage’s business has been up 34% since opening his doors back up. This is a sign domestically that scrap prices may continue to be stable while scrappers see their yards fill with stuff they wouldn’t normally receive.  However, scrappers like Dennis are still aware about what is going on overseas in China,

The recession and then a decline in demand from China hurt the scrap market, and the number of companies has dropped to about 80, Laviage said. – The Seattle Times, Houston Scrap Metal Operator Welcomes Harvey Recyclables

China was once the biggest importer of recyclables from plastic to scrap metal.  Since the beginning of July though, China has slowed and even now restricted the import of certain scrap material into the country while in turn inundating the steel market. China has also slowed construction across the country in the past two years because there is not as much of a demand to live in newly built cities in more rural areas. China is also trying to appease the world environmentalists by cutting back its fossil fuel burning.  It seems their new trade restriction is helping the environment, but hurting the global market.

In the future the U.S. will hopefully turn some of its scrap metal exports towards the southern portion of the asian-pacific market to countries like Taiwan, Indonesia, and Vietnam; the top three buyers in scrap metal in the first six months of 2017.  The U.S. will accumulate more scrap in the fourth quarter from the natural disasters and not having China as a major buyer could really hurt the global market. The U.S. needs to find the right buyer to deal with the growing surplus in order for the metal prices to stabilize and even grow domestically.

Our most recent Markets & Metals blog shows Zone 3, which includes Texas, being stable to this point.  We expect there could be volatility in the market now because of how China has backed off from buying from the U.S. and a growing surplus in the upcoming months from the recent disasters.

Logan McCulloughHouston Scrap Market in Hurricane Aftermath

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