Global steel shortages have provided unexpected help for automakers as they prepare to meet new European Union laws that will govern vehicle recycling starting Jan. 1, 2007.
The present high price of steel likely will make the environmental initiative a success because it will underwrite the cost of recycling. "The issue has been saved by the current price of scrap steel," says Max Pemberton, an analyst at autelligence.com in London.
Global demand has pushed the price of a scrap steel to about $265 a ton, compared with less than about $120 a few years ago.
"As long as the price stays high, people will want to do this (recycling) business," Pemberton says.
A return to lower steel prices would change that picture.
But Nicholas Lee, head of technical affairs for PSA/Peugeot-Citroen SA in the United Kingdom, says: "We don't believe prices will go down much. Even if they did, we believe (recycling) would still be profitable."