Recyclers struggle amid economic slowdown

China’s economic slowdown has made conditions in the recycling industry so bad in recent months that some in the industry are finding it hard to stay afloat.

“It is a tough year for the recycling business,” said Dong Qinghua, a self-employed recycler in Beijing, who has worked in the business for more than 20 years. “It is harder to find both sellers and buyers.”

He said profits from the scrap iron recycling business are only half of what they were a year ago.

He said he could make a 20 yuan ($3.20) profit from selling a ton of scrap iron last year, but “now I can only make 10 yuan”.

He now pays about 2,000 yuan for a ton of scrap iron and sells it to steel mills. The unit price was about 3,000 yuan a ton last year.

The last month was especially difficult for him. He said he could only buy between one and two tons of scrap iron in May.

“I used to buy hundreds of tons of scrap iron a day in September when we had good business and worked long hours at that time,” he added.

Recycled iron prices are influenced by steel prices. Since October, steel prices have been falling and inventories have been building up at many domestic steel producers.

The slowing economy, which has reduced steel demand, has influenced self-employed recyclers and waste recycling companies.

Beijing Hongda Weiye Recycling said the price for a ton of scrap iron is 2,600 yuan to 2,700 yuan, down 12 percent year-on-year.

Zhang Wei, the company’s manager, said prices for new steel are falling, with scrap iron prices following the trend.

“The oversupply situation is really bad now in steel mills,” he said. “Prices will probably continue to fall.”

He said many recycling companies are getting out of the industry this year because of the slowing economy, and his company has also been hurt.

“Profit is down 75 percent so far this year, so we have to depend on volume,” he added. “Employees’ salaries have not been raised in the last year.”

Guanniufang Waste Recycling said its business volume was down 50 percent compared with last year.

Huo Jian, the company’s purchasing and sales manager, said the decline in construction projects is a major cause of the contraction in the scrap iron sector.

Rising demand for steel and other fabricated metals drove up prices after the financial crisis in 2008 and business boomed. Companies entered the market quickly at a large scale.

However, when the government imposed curbs on the real estate industry, scrap iron prices started to fall. And the slowing economy is a real challenge for the sector.

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