UAW Strike at Stamping Plants Could Affect Scrap Supply

A work stoppage was announced at Ford’s Chicago Assembly plant last Friday. Meanwhile, while there’s no strike at the facility, General Motors announced layoffs at its Parma Metal Center in Ohio. The automaker said this was a result of the ongoing labor action. 

“Those two plants generate approximately 17,000 gross tons per month of busheling and bundles,” the scrap source said.  

“I would think the loss of these scrap-generating operations would affect supplies to receiving mills,” the source added. However, he said these mills seem to be “operating fine with the recent increase in bookings.”  

Similarly, GM also recently announced layoffs at its Marion Metal Center in Indiana.

Another source said he didn’t detect much impact from the strike on scrap demand or supply. Still, he said that the more the work stoppages expand, the fallout will obviously increase. 

“Initially, we could see scrap trade a little lower in October,” the second source said. However, he noted, “it’s hard to tell whether that’s maintenance outage related vs. demand curtailments due to the strike.”

The second source said scrap “would likely trade lower anyway, even without the strike,” citing the maintenance outages.

He said once the strike is resolved, “that will improve demand more as we get into the season when scrap supply tightens anyway.” 

“So a resolution of the strike should help demand into the winter,” he concluded.

A third source agreed that the impact to scrap supply or demand so far has been “inconsequential.”

“To my knowledge, mills in the Ohio Valley have not altered their scrap demands relative to any strike-related activity,” he said.  

“There is, of course, posturing on both sides pointing to the strike for reasons to either raise or lower prices,” the third source added.

Looking at the big picture, market participants may be holding onto material.

“As for hedging, many dealers plan on holding back scrap in anticipation of higher demand and prices in Q4 due to broader market issues,” the third source said.