Scrap-metal Dealer: 'I Earn Only $2 to $3 a Day'

FF Fashion

Amanda Yong
Wed, Nov 19, 2008
The New Paper


SCRAP-metal dealer Lau Kwan Chu does not know what the word 'sub-prime' means.

The financial meltdown on Wall Street remains a mystery to him. And the chaos in global stock markets has thus far eluded him.

But the 75-year-old knows that the economic slowdown has caused the prices of second-hand metal goods to plummet by as much as 80 per cent in the past three months.

Sitting on a badly-worn stool in his hole-in-the wall shop space on Clive Street in Little India, he said he felt the pain acutely.

'I've been in this business for 25 years, and this is the worst I've seen so far,' Mr Lau said in Mandarin.

His one-man outfit used to make profits of between $200 and $300 a day.

'Now, I can barely make any money at all, maybe only $2 or $3 a day at the most,' he said.

Pointing to a 20kg plastic bag of assorted low-grade scrap metal, he said: 'This used to be worth $8 a few months ago, more than enough for a good meal.

'Now, it's worth only 60 cents, not enough to even buy a meal.'

Mr Lau said that due to the low prices, he sees fewer sellers - a mix of locals and foreigners - at his shop.

'People don't really come with their second-hand metal items nowadays because it's just not worth it. Some of the items are heavy and troublesome to carry here.

'And they don't fetch much,' he said.

However, he continues to buy items from sellers - now reduced to barely a trickle - who come to his shop with their metal odds-and-ends.

During the interview, a couple in their 40s approached him with two plastic bags of metal items including a table fan.

He fished a crumpled $5 bill from his wallet and said to them: 'Prices have fallen a lot. They're really low now.'

Can't say no

After they leave, he said: 'Even though I hardly make any money now, I still buy from the people who come to my shop.

'How can I reject them? I can't bear to do that especially when old people try and sell me small items. I just accept the things and give them a dollar or two.'

Even the companies to which Mr Lau supplies his metal scrap have cut down on their visits.

'A few months back, a lorry would come twice a week to collect the scraps. Now, it comes only once in two weeks because the big companies don't have many overseas orders now,' he said.

The bottoming prices in the scrap-metal market has hit Mr Lau's pocket.

'I used to be able to give my wife some money to buy household items, but I've stopped doing that,' he said.

His wife, a retiree in her 60s, used to work as an orderly in a hospital. She suffers from heart problems and other illnesses. Her monthly pension is barely enough to foot her medical bills, he said.

They do not depend on their children for financial support. Their two daughters have their own families, while their son, who earns $1,000 a month, has barely enough for himself.

Is he worried about the situation?

'Yes, of course I'm worried,' he said, and paused, anxiety written on his weather-beaten face. 'But what can I do? I've no choice.'

The gloom felt by Mr Lau was shared by other scrap-metal dealers The New Paper interviewed.

Mr S Chew, 32, a scrap-metal dealer in Defu Lane, said October was a terrible month for those in his trade.

'Last month was the worst I've seen since my father's generation,' he said. His family has been in the scrap-metal trade for 30 years.

Mr Chew, who has been in the business for 10 years, said the stress was almost unbearable as 'there were times when prices dropped two or three times in a day' last month.

'I would receive calls a few times a day about falling prices,' he said.

He added that with commodity prices nosediving by as much as 70 per cent last month alone, he has suffered losses of about 50 per cent.

Scrap copper now fetches between $2 and $3 per kg, Mr Chew said. This is down from a reported high of $11 per kg in October last year.

An employee from Ban Hoe Hardware, a scrap-metal company in Little India, said that business has been bad for the past six months.

'With the slowdown in the property market and the construction sector, scrap-metal prices have been dropping,' she said.

Earlier spike

Scrap-metal prices saw a sharp spike over the past few years, fuelled by growing demand from emerging economies such as India and China - the world's largest metal consumer .

But the troubled global financial markets have put the brakes on demand.

Mr Chew said the larger wholesalers who buy scrap metal from his company have scaled down their orders due to weakening demand from buyers in China.

Will China's new four trillion yuan ($878.5 billion) stimulus package lift the scrap-metal market out of the doldrums?

While copper prices on the London Metal Exchange rebounded by almost 10 per cent the day after the stimulus package was announced, official figures released last Thursday showed that China's output of refined copper fell to a three-year low in October.

Mr Chew is also not optimistic about the outlook in the near term.

'To be frank, although I've been hearing from news reports that the scrap-metal trade will improve by the middle of next year, I think that the recovery will not be that soon,' he said.