Business Topics

Scrap Supply Glut is Harvey's First Metals Impact

By on
The series of storms that ravaged the United States over the past two months will have a tremendous effect on the U.S. economy in multiple ways.

Argus Metals reports that Hurricane Harvey did damage to more than 350,000 vehicles, just in Southeast Texas. To date, just short of 300,000 auto insurance claims have been filed, with the remaining 50,000 vehicles being either underinsured or uninsured completely.

Of the claims, only 30 percent of those vehicles will be repaired. The rest are in the process of landing at the various scrap yards in the Houston area.

The unexpected demand for more than 200,000 new vehicles in just one area of the country, and not the only area hit by storms this season, will undoubtedly boost the North American auto market in the months to come. It’s possible this jolt could be enough to reverse the modestly declining trend that has been in place throughout 2017.

The more immediate effect, Argus reports, is on the ferrous scrap market, which has been inundated with this unexpected supply of new material. Argus reports the shredded ferrous scrap market in Houston will grow by more than 26,000 tons over the next six to nine months.

“In October, market participants expect the surplus supply from the hurricane to drive shredded scrap prices in Texas down by as much as $30 per gross ton. Without a strong pick-up in export demand, pressure on shred prices is expected to persist into 2018 as the overhang of shredded material lingers,” Argus reports.