Scrap buyers cancel purchases

Scrap steel buyers in Asia are canceling purchases after prices tumbled more than 80 per cent in the past four months as demand slumps, traders said.

“There are buyers in China, India and Europe that are literally fighting for their survival,’’ said Bob Garino, director of commodities at the Institute of Scrap Recycling Industries, a Washington-based trade association representing more than 1,600 companies worldwide. “Steel prices have fallen off a cliff, and they just don’t have the money to honor their contracts.’’

Sims Group, the world’s biggest recycler of scrap metal, said in October sales may fall for the Sydney-based company and force an inventory writedown. Mills in China, Japan, India and Korea, which account for more than 50 per cent of the global output, are slashing production as the economic slowdown curbs demand from builders and car makers.

Prices fell to $120 a tonne this month, from $730 a tonne in July, said Jeff Allman, managing director of ferrous trading at St Louis-based Kataman Metals, which does more than $1 billion in scrap trades a year. There may be a global ferrous, or steel-rich, scrap oversupply of more than 5 million tonnes, he said in an interview in Shanghai.