Economic doldrums show up in the scrapyards, too
In the "old days" a few years ago, when tired gas guzzlers finally wore out, many urban-dwellers simply left them where they died: in the street. But with car prices as high as they are lately, people are not abandoning the old heaps as they used to. But cars that are left in the streets aren't being picked up as fast, either, because of low scrap prices.
Fewer abandoned cars are making life a little easier for police and sanitation departments across the country; and while scrap dealers would usually be happy to have an abundant supply of flattened chariots in their yards, the slow supply of "junkers" is probably just as well for them, too. There is not much demand for scrap right now, so they simply don't have as many places to sell their junk.
The New York Sanitation Department reported the number of abandoned cars fell from 79,000 in 1979 to 33,112 in 1980. Vito Turso of the department said he thought more people were repairing cars than abandoning them.
"It's economically impossible for people to get another car, so they'll sink another $200 in it," he said.
The Chicago Police Department, meanwhile, reports 4,291 fewer abandoned cars in the first seven months of 1981 than a year ago.
And with demand down for scrap, scrap dealers aren't paying very much for those cars that are abandoned. Scrap now sells around $90 a ton, down from its high of $140 in the early 1970s. The problem, dealers say, is that they don't have very many places to sell their goods, with the world economy still in a slowdown.
"Our scrap exports are down 44 percent from a year ago," said James Anderton of the Institute of Scrap Iron and Steel (ISIS). "The high value of the American dollar overseas and the fact that we are in a general recession have caused consumers worldwide to not buy." The institute is a trade association of 1,600 members, mostly scrap dealers or processors.
US steel producers, the biggest users of scrap metal, aren't doing much to help scrap dealers, either. Steel production dropped 20 percent last year, a period that "could not happen again," according to a spokesman at the American Iron and Steel Institute, whose members turn out 90 percent of the country's steel.
Already, things have gotten a little better for scrap dealers, as steel production shows a modest improvement over last year. Domestic consumption of scrap was up 6 percent for the first five months of this year.
Still, the United States continues to turn out more scrap than it consumes.Last year, 55 million tons of scrap were generated, while 40 million were consumed. It could be even higher, Mr. Anderton says, if more steel were produced in electric furnaces, which now account for less than 30 percent of production. (Scrap is the primary raw material for electric furnaces.) He would like to see that figure between 40 and 50 percent.
Scrap producers say they would like to export more, but they see a threat to such extra sales. US steelmakers, they say, want to limit scrap exports, a situation they see as puzzling when there is no current growth in demand. The steel industry has asked the Commerce Department to monitor scrap exports and limit them when the level gets too high, an action the Scrap Institute opposes.
"We can't understand why the steel industry is concerned," Anderton said. "Instead of going to the mat to fight, the American steel producer runs to Washington for protection."
But a Commerce Department spokesman says: "The issue is who's going to make the money. The scrap industry wants a free market, and the steel industry wants a subsidized market. The steel industry would like a guaranteed low price for scrap, and the scrap industry wants to be able to export. ISIS is being unduly touchy about monitoring, because of the inhibition of sales."
Sheldon Wesson of the American Iron and Steel Institute says the steel industry's concern over scrap exports is supported by a 1977 report by a Fordham University economics professor, which predicted the country's scrap supply would run short by 1982.
The Rev. William Hogan, who wrote the report, said the increased use of electric furnaces could cause a potential scrap shortage, as these furnaces use a 100 percent scrap charge. Other steelmaking processes use iron and perhaps 40 percent or less scrap.
Electric furnaces, which produced only 8.4 percent of the nation's steel in 1960, are expected to make 33 percent by 1985. Last year they produced 27.9 percent.
But the scrap industry counters with a 1980 report by Robert R. Nathan Associates, an economic consulting firm, which said that a 700 million-ton inventory of scrap exists in the country. Anderton said that no mill or foundry over closed because of a scrap shortage.
This inventory figure is too high, Mr. Wesson argues, because it includes "potential" scrap that high prices would bring to the market.