South Texas ferrous scrap yards are facing inflow headwinds as increased efforts by US immigration officials to detain and deport non-citizens affect peddler traffic and the labor force.
Several market participants speaking to Argus on condition of anonymity have reported a steep decrease in scrap inflows along the US-Mexico border in Texas since the start of President Donald Trump's second term in mid-January due to raids by US Immigration and Customs Enforcement (ICE) agents. Sources surveyed by Argus estimated a 25-50pc reduction in scrap being sold to yards in south Texas as a result of the raids, but they struggled to provide a more specific volume of scrap not delivered.
Peddler traffic — scrap sold to yards by the public — accounts for a considerable percentage of material acquired by yards in the region, a market participant said. Sources said that many peddlers, as well as some workers at yards, are non-citizens and risk deportation if detained by ICE.
The reduction in scrap flows is much larger than what would be seen from peddlers and yard workers who have been detained by ICE or the US Customs and Border Protection agency, they said, and is likely the result of a wider pull back from peddlers, nervous over the risk detention and deportation.
Several yards reliant on peddler traffic or undocumented labor have shut in recent weeks, sources familiar with the matter said.
ICE has been raiding communities along the border since early in the year when President Donald Trump started his second term. The recently-passed US budget bill allocated $45bn to, in part, hiring "thousands" of new ICE and Border Protection agents.
It is unclear how much scrap is sold to US scrap yards by sellers who lack US citizenship, but continued pressure on those sellers and undocumented workers could cause supply tightness and labor shortages in south Texas yards.
The monthly Texas ferrous scrap trade is expected to settle today, with several mills bidding all grades flat from June settlements.
