Scrap metal dealers feel pinch

The usually bustling streets of the UAE's industrial zones, home to most of the country's rubbish tips, are much quieter of late because of a decline in the scrap metal trade.

"In general, the economic downturn has reduced scrap flows as manufacturing and consumption activities decline," said Sabika Shaban, the marketing manager for Dubai's Lucky Group, one of the largest integrated metal recyclers in the region.

"Lower consumption activity tends to encourage individuals to hold on to their cars, appliances and other products for longer, reducing the build-up of recyclables."

Ms Shaban said that, as well as choking the supply chain for scrap metals, the economic downturn also reduced the demand for recycled products.

"With lower demand results lower manufacturing levels and less metal waste is generated within industries," she said. "This overall leads to sluggish metal scrap flows, which makes competition very intense for the limited scrap supply."

The scrap metal business in the UAE was thriving before the recession, with recycled metal products exported after processing. This brought significant income to the local economy.

Volume is down about 20 per cent across the industry but some small players have been hurt far worse.

Azad Khan, the foreman of Ajman Steelworks, a steel fabrication shop in Ajman, said business was so slow he was afraid he might be forced to close it.

"Two years ago we were getting about Dh50,000 (US$13,612) a week," Mr Khan said. "Last year we came down to about Dh30,000 a week but now if we get customers we can make at most Dh15,000 a week. But I still have to pay salaries for my three employees, pay rent and utilities for the shop."

Before the slowdown, the rubbish tips used ferrous and non-ferrous metals including iron, steel, copper, aluminium, brass, lead and stainless steel for reprocessing.

The metals came from the transport, construction, packaging and engineering sectors. For the most part these same sectors used to buy back the reprocessed metal.

Businesses hope things will soon improve "otherwise we are not going to survive", said Mr Khan.

business@thenational.ae