Karung guni men switch jobs as slump in demand cuts scrap prices by 50%
Jessica Lim, Straits Times 13 Nov 08;
FOR three years, Mr Chua Chuan Soon has been supporting his wife, three children and himself by collecting scrap metal.
The 55-year-old was making enough to buy his own truck, cover the rent on his modest flat and put his kids through school.
But the global financial turmoil has caused the price of scrap metal - along with used cardboard and newsprint - to plummet during the last three months.
That has made his rag-and-bone business a losing proposition.
'I am going to stop working soon if things go on like this,' said Mr Chua, as he unloaded pipes, lampshades and a shower rail at a Jurong recycling centre.
While being a karung guni man has never been a lucrative profession, hundreds of Singaporeans do it either as a full-time job or to supplement their income.
The trade, though, has been especially hammered in recent months. Demand for scrap metal and paper from factories in the United States and Europe - the ultimate destination for most of Singapore's recyclables - is falling.
These factories turn recyclable materials into everything from stereos to cardboard boxes. But fears of a recession have prompted consumer spending to drop, said Standard Chartered (Stanchart) economist Alvin Liew. 'People are spending less on electronic products themselves, and derived demand of packaging like cardboard boxes will also fall,' he said.
That has forced Singapore recycling companies to slash the amount of money they are willing to pay for raw materials. Karung guni men said the prices of cardboard and scrap metal have dropped by 50 per cent in the last three months.
In turn, the number of karung guni men has dwindled.
Scrap metal recycling company Lian Tian Trading now receives about 50kg of aluminium drink cans from about 12 such collectors daily. That is down from over 100kg from about 25 rag-and-bone men three months ago.
Singapore Recycle Centre, which used to accept old newspapers from about 25 rag-and-bone men a day, has seen none come in over the past two months.
'Many karung guni men have switched to doing something else. Every day fewer and fewer call us. They are waiting to get a good price, but no one knows when that will happen,' said manager Sophia Su.
The precipitous drop in demand has also lowered the rates collectors are willing to pay Singaporeans for their old newspapers and cans.
A kilo of paper will now put only about seven cents in your pocket, down from about 12 cents three months ago. The value of scrap metal, like aluminium cans, has dropped to about 60 cents per kg from about $1.30.
Karung guni men said it is just not worth their while to offer more.
Mr Koh Ah Leong now takes home $800 a month, down from $1,200 three months ago. To supplement his income, the 50- year-old has started looking into bins outside factories and food centres for cardboard and aluminium.
However, the dwindling supply is unlikely to worry recycling companies.
At Singapore Recycle Centre, monthly sales of recycled paper have fallen 90 per cent in the past three months, said Ms Su.
The factory grounds of Lian Tian in Jurong are piled high with surplus blocks of crushed metal.
'There is a lot of stock now; we just store it hoping for a better time,' said manager Tan Saw Hoon with a sigh.
Stanchart's Mr Liew expects the trend to persist until the end of next year, when 'we might see demand returning to key export markets'.
Scrap metal collectors lose business due to price drop
Agnes Winarti, The Jakarta Post 12 Nov 08;
Dozens of pushcarts, which are usually shoved by mobile junk vendors around housing complexes, were parked idly in front of a junk distributor near a traffic light on Jl. Letkol Sugiyono, East Jakarta recently.
Nineteen-year-old Erik Estrada, son of the junk distributor, was sitting in his shop as idly as his father's pushcarts.
"Only three of our 27 vendors are currently out there working to buy scrap metal and other junk in nearby housing complexes," Erik said.
"The rest prefer to stay in their kampung or hometowns to harvest their rice fields instead of working here because the price of junk metal has plunged over the last two months."
He said the price of metal waste had plummeted from Rp 58,000 (US$5.5) to Rp 35,000 per kilogram for copper waste; Rp 5,000 to Rp 2,200 per kilogram for scrap metal; Rp 15,000 to Rp 10,000 per kilogram for aluminum waste; and Rp 38,000 to Rp 18,000 per kilogram for brass waste.
Another junk distributor on Jl. Poncol, East Jakarta, Haki, said he had experienced a similar condition.
"The prices of all kinds of junk, from paper to plastic, but especially scrap metal, has dropped to half their normal prices," said Haki, who opened his junk shop 10 years ago.
Haki, who used to distribute two to three tons of scrap metal to five smelting factories in Cakung, East Jakarta, every day, said they could now only deliver the goods once every two or three days. He estimated that he had suffered losses of more than Rp 50 million over the past month.
Scrap metal is smelted in factories and turned into iron bars, which are then used for construction. The bars are exported and traded domestically.
"Today's economic crisis is worse than ever before," said Oji, 49, who has pushed pushcarts as a mobile junk vendor since 1980.
Oji came back to Jakarta from his kampung in Karawang after the recent Lebaran holidays with Rp 300,000 cash in his pocket only to find that life was financially more difficult.
After running out of cash, Oji said he had to give his identity card to his boss at the lapak (junk distributor) as collateral to receive Rp 60,000 in order to get by for a few days.
He said due to the plummeting price of scrap metal, people originally intending to sell junk canceled their transactions, deciding to wait until the price went up again.
Oji said many lapak had temporarily halted their business operations.
"My boss, for example, can only buy scrap metal now, but he does not sell it to the factories because the price is too low. If he ever stops buying from me, I will have to go home to Karawang where there is no work."
Similar conditions face scrap metal traders in Bekasi.
Saleh Lubis, a trader for 20 years, said he had accumulated more than 50 tons of scrap metal at his shop, adding that he had stopped buying metal from mobile junk vendors.
The price of scrap metal is set by the smelting factories.
Furthermore, there is no specific government regulation on the price of scrap metal.
The Association of Scrap Metal Traders chairman, Rizal M., said thousands of traders and tens of thousands of mobile junk vendors around Greater Jakarta were at risk of losing their jobs.
"The factories and scrap metal traders must reach an agreement on price," he said.
Rizal said scrap metal traders in Greater Jakarta supply 30 percent of the material needed by metal factories like PT Jakarta Cakratunggal Steel Mills, PT Gunung Garuda, PT Wahana, and PT Master Steel, while the remaining 70 percent was imported metal materials.
"If we stop supplying to factories, we fear the factories will increase their metal import volumes.
"Factories can also give the excuse that the market is determining the price," said Rizal, whose association was currently planning to protest at the factories and House of Representatives.
"In the meantime, we hope the trade and industry ministries assist us in finding the fairest solution to the price plunge."
