The sharp decline in commodities prices in recent months brought a steep drop in the price of scrap metals salvaged from commercial demolition jobs.
That pinches demolition contractors who counted on scrap sales as part of their profit.
Tilio Olcese, owner of Olcese Construction Co., a demolition specialist headquartered at Incline Village, says he was paid $300 a ton for scrap metals in May.
Today, the price has fallen to about $40 a ton.
"Beginning in September, it is like prices were cut in half overnight. They have been on a continual downslide since that date," Olcese says. "People I talk to who have been in the business 30 years say they have never seen anything like it."
For instance, the price of copper, which traded on the London Metals Exchange between $3.50 and $4 a pound earlier this year, sagged to under $1.50 a pound.
Olcese says salvaged copper pipe fetched $3.50 a pound in July. Today's he's lucky to get 90 cents.
The contraction in salvageable goods affects the way demolition contractors bid for work.
Troy Greeley, an estimator and superintendent for LVI Environmental Services, which recently expanded to northern Nevada from Las Vegas, sayS the drop in salvage prices means he no longer can pass salvage savings onto customers through lower bids.
"We do give an owner a little bit of a break on numbers based on salvage, but it's not there now," Greeley says. "Where we used to pass on savings in a base number, we can no longer do that with price of salvage. Everything has dropped."
Olcese says he bid some of the jobs currently under way under the assumption that he'd get $300 a ton for scrap. He's losing money now that he's paid $40 a ton.
"The difference comes out of our pockets," he says.
When prices were high, Olcese Construction salvaged anything and everything metal: Structural steel, boilers, fire sprinkler pipe, metal staircases, roofing, electrical conduit, steel brackets even nuts, bolts and washers.
"When it was $300 a ton we cherry-picked everything," Olcese says. "Now it doesn't pencil out."
The sharp price decline for salvaged metals means more materials will be headed to local landfills.
Olcese says he no longer can figure money from salvaged scrap into job bids and will simply trash
everything. He expects scrap prices to remain flat for the next six months before creeping back to $80 or $90 a ton.
"Will we every see $300 a ton again? Not in the next five years," Olcese says.
Walt Greene, manager for Solid Waste Reduction Services on Valley Road in Reno, says reduced demand from Asian markets led to the contraction.
"Most of the metal goes overseas, to China, Japan, India, and if those countries don't need metals, it just piles up on our ships and in our railyards," he says.
As a result of falling scrap prices, Solid Waste Reduction Services laid off more than 15 workers. The
company still employs about 20.
"We have to lower our profit margins in order to stay competitive," Greene says. "If the machine shops and manufacturers don't have any orders and are not making parts or manufacturing, our volume is way down."
