Mark Kamensky, president of E.J. Knight Scrap Material Company, has seen a dramatic drop in scrap metal sales. Piles of metal that he would normally sell in a day now sit on the lot.
And that’s not good news. Just ask Mark Kamensky, a third-generation salvage yard owner.
“I probably got a half a million dollars here in good times,” Kamensky said last week. “In today’s market, it’s probably worth $100,000 — and that’s if I could get somebody to take it. Nobody wants it. I couldn’t give it away.”
In about two months the scrap metal business has gone from boom to bust.
It happened quickly.
“That’s an understatement,” Kamensky said. “It happened over a six- to eight-day period.”
Around Labor Day, Kamensky and others in the scrap metal business noticed a fundamental change that was triggered when the bottom fell out of the international market: Orders from China stopped.
Rick Caldwell, general manager of Schnitzer Steel’s Columbus plant, the former J.T. Knight plant, said it was abrupt.
“The bottom line is China has pulled out of the market,” Caldwell said. “There is no export now. It’s been that way for a couple of months.”
It’s been a double whammy, Caldwell said.
“The second thing is, 85 percent of what we generate goes into automotive and housing,” he said. “We sell to the guy who melts it down. He sells to General Motors, which makes a transmission out of it. It is amazing how integrally connected we all are with automotive and housing.”
Kamensky blames what he calls “a runaway U.S. economy.”
“Scrap metal got caught in the correction,” Kamensky said. “Just like the home builders, the bankers and whoever else.”
What scrap metal dealers have seen is a devaluation of their recyclables.
At its peak, aluminum was bringing 60 cents a pound. Now, Kamensky is paying 20 cents per pound. And it’s not just aluminum. Copper, just two months ago the hottest metal on the market, has fallen from $3 per pound to $1. Prime steel — for which Kamensky was once getting 35 cents per pound when he sold it — now goes for 6 cents per pound.
“And that is if you can even get an order for it,” he said.
A lack of orders creates a problem for Kamensky, who is still buying scrap.
“The yard is stacking up and the bank account is going lower and lower,” he said.
The company, run by his grandfather and father before him, has been in business for 102 years. Kamensky said the company, which employs about 40 people, will find a way to fight through the difficult economic times.
“I have told the employees that everyone will get 40 hours a week until the end of the year,” he said. “However, Jan. 1 we are going to have to take a hard look at it. We have been here 102 years and I believe you have to change with the times. I know people are going to recycle.”
Caldwell believes that, too.
“There is an ebb and flow,” Caldwell said. “This one hit faster and harder than usual. But it will come back. When? I don’t know because I don’t have a crystal ball.”
The reason Caldwell is confident it will bounce back is the international market, the same business that dried up overnight.
“It was being driven by China,” Caldwell said. “They were buying a lot of scrap. That is what I feel will come back. China has 1.3 billion people. And India has another billion. The infrastructure of these countries will need scrap.”
Caldwell chooses to be an optimist.
“I don’t think the world is coming to an end,” he said. “We have been there before and we will get through this one, too.”
And that’s not good news. Just ask Mark Kamensky, a third-generation salvage yard owner.
“I probably got a half a million dollars here in good times,” Kamensky said last week. “In today’s market, it’s probably worth $100,000 — and that’s if I could get somebody to take it. Nobody wants it. I couldn’t give it away.”
In about two months the scrap metal business has gone from boom to bust.
It happened quickly.
“That’s an understatement,” Kamensky said. “It happened over a six- to eight-day period.”
Around Labor Day, Kamensky and others in the scrap metal business noticed a fundamental change that was triggered when the bottom fell out of the international market: Orders from China stopped.
Rick Caldwell, general manager of Schnitzer Steel’s Columbus plant, the former J.T. Knight plant, said it was abrupt.
“The bottom line is China has pulled out of the market,” Caldwell said. “There is no export now. It’s been that way for a couple of months.”
It’s been a double whammy, Caldwell said.
“The second thing is, 85 percent of what we generate goes into automotive and housing,” he said. “We sell to the guy who melts it down. He sells to General Motors, which makes a transmission out of it. It is amazing how integrally connected we all are with automotive and housing.”
Kamensky blames what he calls “a runaway U.S. economy.”
“Scrap metal got caught in the correction,” Kamensky said. “Just like the home builders, the bankers and whoever else.”
What scrap metal dealers have seen is a devaluation of their recyclables.
At its peak, aluminum was bringing 60 cents a pound. Now, Kamensky is paying 20 cents per pound. And it’s not just aluminum. Copper, just two months ago the hottest metal on the market, has fallen from $3 per pound to $1. Prime steel — for which Kamensky was once getting 35 cents per pound when he sold it — now goes for 6 cents per pound.
“And that is if you can even get an order for it,” he said.
A lack of orders creates a problem for Kamensky, who is still buying scrap.
“The yard is stacking up and the bank account is going lower and lower,” he said.
The company, run by his grandfather and father before him, has been in business for 102 years. Kamensky said the company, which employs about 40 people, will find a way to fight through the difficult economic times.
“I have told the employees that everyone will get 40 hours a week until the end of the year,” he said. “However, Jan. 1 we are going to have to take a hard look at it. We have been here 102 years and I believe you have to change with the times. I know people are going to recycle.”
Caldwell believes that, too.
“There is an ebb and flow,” Caldwell said. “This one hit faster and harder than usual. But it will come back. When? I don’t know because I don’t have a crystal ball.”
The reason Caldwell is confident it will bounce back is the international market, the same business that dried up overnight.
“It was being driven by China,” Caldwell said. “They were buying a lot of scrap. That is what I feel will come back. China has 1.3 billion people. And India has another billion. The infrastructure of these countries will need scrap.”
Caldwell chooses to be an optimist.
“I don’t think the world is coming to an end,” he said. “We have been there before and we will get through this one, too.”
