WILL THE SCRAP METAL PRICE COLLAPSE RESULT IN MORE ABANDONED VEHICLES?

There is growing speculation that a continuing decline in scrap metal values will witness a resurgence of abandoned vehicles, and a sharp contraction in the ELV & metals recycling industries.  Pessimism in the marketplace has been underlined with the recent major metal industry closures, collapses & cutbacks - including the announcement today by TATA about 1200 UK job losses.

In recent months we have heard reports of members starting to refrain from paying for ELVs needing collection or offering only low prices for ELVs delivered into their sites.  The brunt of the value collapse is being experienced by small volume operators but even larger operators in some parts of the country are seeing collected bulk light iron prices as low as £25/ tonne.

It was back in 1999-2003 that abandoned vehicle problems last reached fever pitch, with a reported 330,000 vehicles being abandoned annually – with local government authorities (i.e. the taxpayer) footing the bill.  At the time, it was the weakness in the UK vehicle registration system that allowed this to happen – something that continues largely unchanged to this day, with up to 600,000 vehicles disappearing in the UK every year.  But this was before the ELV Directive was in place.

So the collapse in metal values potentially moves us into uncharted territories.  The EU ELV Directive, & the ‘own marque’ system implemented in the UK, was supposed to ‘head off’ this problem, by making ‘producers’ (vehicle manufacturers) responsible for ‘zero value’ ELVs and all VMs were required to, & have, established ‘free take back’ networks (the two service providers being CarTakeBack & Autogreen).

It remains to be seen exactly what ‘free take back’ really means, but it is generally envisaged to mean ‘free acceptance upon delivery of the ELV by the owner to an appointed take back location’.  Whether it would be acceptable to make a charge for collection is currently unclear.  But it is also our current understanding that service provider contracted ATFs are legally obliged to accept ELVs delivered to them FOC – a situation many thought would never arise.  Non-contracted ATFs have no such acceptance obligations.

MVDA members are invited to let us know, in confidence, how they are currently coping & what values they are managing to obtain for light iron sold to metal merchants.

We will be in touch regularly with Government to see how they view the current situation.