Spokane-area scrap metal collection and recycling companies say a global market slowdown has battered their industry in recent years, and industry forecasts indicate a rebound in demand for scrap metal is still at least three years away.

“It’s really been difficult for about a year and a half,” says Stuart Boylan, branch manager at Pacific Steel & Recycling, located at 1114 N. Ralph.

“When China, India, and Europe—especially China—stopped growing, then demand dried up,” Boylan says.

Boylan declines to disclose Pacific Steel’s revenues, but he says annual revenue is down 40 percent from two years ago.

In March, citing data from the Institute for Scrap Recycling Industries, the Wall Street Journal reported that more than 50 metal scrapyards had stopped operating in North America.

U.S. scrap exports fell to $4.1 billion in 2015, down 34 percent from $6.2 billion in 2014. 

The Wall Street Journal article reported that the index price for scrap steel in the U.S. had fallen 29 percent to $203 a ton, down from $261 a ton a year earlier and from well over $400 a ton several years ago.

The American Metals Market says prices of scrap fell through the summer, and the Metal Bulletin Research Steel Scrap & Metallics Forecaster says that prices are likely to fall about 10 to 15 percent between the third and fourth quarters of the year, depending on the grade of metal.

“It would take an unforeseen global event to increase demand for metals anytime soon. There are no big dams being built, skyscrapers, or big cities emerging out of nowhere,” Boylan says.

Jake Vander Zanden, an outside buyer for American Recycling Corp., at 603 E. Mission, says Pacific Rim nations led by China once fueled demand for scrap steel.

“That’s not the case anymore. Personally, I think this is the new norm,” says Vander Zanden, whose job is to secure commercial business accounts, buy scrap from those companies, and sell it to American Recycling’s overseas customers.

“I got into the business at the worst possible time,” says Vander Zanden, who entered the metals industry three years ago.

Ferrous metals include carbon, cast, and stainless steel, in addition to cast and wrought iron. Ferrous metals are used mostly for their strength, especially mild steel, to build skyscrapers and bridges.

Nonferrous metals include aluminum, brass, copper, nickel, tin, lead, and zinc, as well as precious metals such as gold and silver.

But it’s ferrous metals that constitute the most recycled materials in the world, says the World Steel Association, based in Brussels.

New steel production was slightly more than 1.6 billion tonnes in 2015, down 3 percent compared to 2014. In 2015, China accounted for 45 percent of the global demand market for steel by volume, down one percentage point from 2014, says the World Steel Association.

China, Japan, India, the U.S., Russia, and South Korea are the world leaders in steel manufacturing, the steel association says.

Edwin Basson, director general for the World Steel Association, says in the organization’s 2016 annual report, “The global economy is going through a difficult phase as markets adjust to slower levels of Chinese growth—the new normal.”

In addition to slowed growth, Basson says 2015 brought heightened concern in the industry about an excess of steel in the scrap market.

“Overcapacity is a global problem requiring a global solution,” Basson says in the report.

Meanwhile, local metal collection and recycling companies say they are doing their best to stay healthy.

Unlike much of the industry, however, Russ Spalding, the owner of Spalding Auto Parts Inc. at 2210 N. University, just north of Interstate 90 between Argonne and Pines roads, says the economic downturn hasn’t affected his company. Spalding Auto Parts started here in 1934 and operates on 50 acres.

“We’re still processing 1,000 cars a month through here,” says Spalding.

Spalding says the company employs 190 people, and he estimates the company has added 15 positions in the last three to five years.

“Scrap is a by-product for us. We can go through the car and take an alternator and get copper, aluminum, and other metals out of it and sell it. It may be a little different for me along that line,” he says.

In 2011, Spalding formed Pull & Save Auto Parts Inc., at 11125 N. Market in Mead, with his father, Max Spalding, and business partner Dave Kokot. The self-service vehicle salvage yard operates on approximately 20 acres.

In North Spokane, Hap Ahlborn has owned and operated Action Recycling Inc., at 911 E. Marietta, since 1990. He operates the business on 3 acres of land and collects and sells ferrous and nonferrous metals.

“We’re doing OK when I think about all the trade magazines and publications I’ve read that just list one recycler after another going out of business in the last year-and-a-half,” Ahlborn says.

Ahlborn, like Boylan and Vander Zanden, says customer service and pricing are critical to staying in business. 

They say competition for customers is as high as they’ve ever seen it here. They wouldn’t disclose what their respective rates are for buying and selling ferrous metals.

Prices for nonferrous metals also have dropped in recent years. Vander Zanden says when he started working at American Recycling, the company bought copper from customers at $3.50 per pound, which compares to a current rate of $2 per pound.

Both Action and American recycling companies employ nine workers, say Ahlborn and Vander Zanden.

Despite being founded in Spokane, Pacific Steel & Recycling now is based in Great Falls, Mont. Pacific Steel operates in 33 locations in nine states and a Canadian province. Boylan says the company has between 700 and 800 employees.

Pacific Steel’s Spokane operation has 25 employees and the Coeur d’Alene location, at 7448 N. Aqua Circle, has 50 employees.

Boylan says declines in business and veteran worker departures have reduced staff sizes by half in both Spokane and Coeur d’Alene.

“We’re a 120-year-old company that’s experiencing a correction in the market. It’s cyclical,” he says.