Blogs

The Current State of the Scrap Metal Industry

By Adam Ioannidis

The scrap metal industry is on the rise, and as scrap metal buyers in Melbourne, we’re proud to be playing an integral part in this expanding, sustainable field. Today’s article is going to go in-depth and explore the current state of the scrap metal industry both at home and abroad.

Current state and the impact of COVID-19

Metal Men Recycling was still open and available for all your scrap metal recycling needs throughout Melbourne’s 2020 COVID-19 lockdowns. But the overall industry snapshot will tell a different tale. As many industries shut down, the demand wavered. Though construction was continuing, it had been slowed exponentially. As a result, the demand for metal materials dropped accordingly. The result of this was less demand for recycled metals to be reformed into new materials.

As several industries recover over the next couple of years, the scrap metal recycling industry may see a decline. IBIS World has predicted that due to this lack of demand, the scrap metal recycling industry’s revenue will drop. The economic decline (as well as the decline of global steel prices) combined with decreased export activity (due to the general drop in global manufacturing) will spell trouble for the industry’s profit.

This isn’t particularly surprising when you look at how hard some of the other countries have been affected by COVID-19. However, seeing as the scrap metal recycling industry is proving to be an incredibly perpetual, sustainable and cost-effective field – there is no doubt that it will bounce back once demand resumes.

Before the pandemic – the environmental impact

The scrap metal industry saw a healthy and constant rise over the last few decades as many businesses began to see the practicality and effectiveness of using recycled metal instead of mining for virgin ore and crafting fresh metal from that. The environmental benefits alone are huge – with recycled metal manufacturing producing a fraction of the greenhouse gasses and pollution that is released when virgin metal is produced.

Recycling aluminium cans, for example, leverages only 5% of the energy required to create fresh aluminium from ore. With the world slowly (with some countries moving faster than others) shifting towards sustainable processes – the impressive environmental benefits associated with recycling scrap metal are too great to ignore and substitute for anything else. The other area it surpasses fresh metal creation in is the cost.

Economical impact

It is much more economical to not only purchase recycled steel but also create it – with fewer resources required during the recycling process as opposed to the mining and virgin creation process. This fact has become more and more widespread and is prompting industries to change their ways – putting a larger emphasis on recycling scrap steel. 

The result is a forecast that would put the iron ore mining industry at a disadvantage with a decrease in demand. This could have large economic repercussions for large mining businesses such as BHP and Rio Tinto as their largest profits come from iron ore – which, along with coke (a type of coal) and limestone, is one of the main ingredients used in producing fresh steel.

What’s happening in China?

In September 2020, President Xi pledged to make China a carbon-neutral country by 2060. This is a huge deal as China is the world’s largest polluter and mines, as well as consumes, half of all the coal in the world. One of the stipulations of this ambitious goal was that the local steel industry had to create less crude steel to help reach the goal.

This leaves a large gap in the market for recycled steel. The scrap steel industry is expected to rise to fill this gap as a far more sustainable option – not only as one that can help China reach their carbon neutral goal but will also supply them with the same quality of steel.

Are you looking for scrap metal buyers in Melbourne?

Metal Men Recycling are Melbourne-based scrap metal buyers who pride themselves on collecting your unwanted scrap metal and recycling it appropriately to contribute to this ever-growing and thriving industry.

Our large site is easy to access and is home to a weighbridge which is capable of withstanding 90 tonnes. For those large-scale jobs, we offer drop-off and pick-up services and provide bins of varying sizes to meet your requirements.

If you would like to contact us to find out more about our services, then please don’t hesitate to give us a call on 03 5941 6677 or fill out our online enquiry form so we can get back to you as soon as is convenient.

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Find us at: 18 Drovers Place, Pakenham VIC 3810