Last summer, the world’s appetite for recycled metals knew no bounds. In the Tacoma Tideflats, where most recycled metal in the Pacific Northwest winds up, the four big metal recycling firms welcomed lines of trucks piled high with car bodies, bed frames, tire chains and barbecue grills.

Used metal prices were so high, thieves were stripping copper wire out of light poles and prowling Park & Ride lots for catalytic converters.

Then it ended.

Since September, prices for used metal have dropped so precipitously the industry has essentially ground to a halt.

The regular trans-Pacific shipments of scrap from Commencement Bay to China and Korea have stopped; the stream of automobile hulks heading for the Tideflats has slowed to a trickle.

“This was the quickest and most violent downturn in our history, and I’m fourth generation,” said Steve Glucoft, general manager of Tacoma’s Calbag Metals Co., the largest nonferrous metal processor in the Northwest. “Prices are 50-60 percent of what they were 200 days ago.

“For us right now, it’s about cash flow,” Glucoft said. “It’s about staying alive and keeping the doors open.”

Calbag, along with Simon & Sons, Tacoma Metals and Schnitzer Steel, have been efficient and profitable forces in the international flow of metals, thanks to their easy ocean access to Asia.

The big four buy used metal products, separate them by type and crunch them into cubes or shred them. For the most part, they’ve been returning the scrap to China, where it has been melted down and turned into new products, many of which are shipped back to the United States through the Port of Tacoma.

In September, the Asia metals market suddenly took a dive. “It hit the bottom, and everything came to a screeching halt,” Glucoft said.

The fall was more dramatic because it began at such dizzy heights. In July, Portland-based Schnitzer Steel, which is publicly traded, reported a record 37 percent jump in profit – about $972 million – for the previous quarter.

On Dec. 17, Schnitzer announced it expects a loss in the first quarter of 2009 and said it plans to write down of the value of its metals recycling and steel manufacturing inventories by an estimated $60 million.

Schnitzer stock plummeted from more than $118 a share in July to just over $16 in November. On Friday, it closed at $35.10.

ENVIRONMENTAL CONCERN

The metals recycling industry is obviously not alone in its suffering. The worldwide financial crisis has hit virtually every sector of the economy.

But the drop in scrap metal prices is also causing concern of environmentalists because of a possible side effects.

Metal that isn’t recycled gets tossed, which wastes resources and fills landfills.

According to recycling industry figures, approximately 122,000 tons of aluminum and copper and 975,000 tons of iron were recycled in Washington last year, when the economy was flying high.

Statistics collected by the Steel Recycling Institute indicate that automobiles were recycled at a rate of 110 percent in 2007. That means that, thanks in part to high metal prices, old cars were turned in for scrap faster than factories churned out new ones.

Now, however, with no financial incentive to recycle, environmentalists fear recycling rates may plummet. The moral incentive of “doing the right thing” might not be enough to maintain a recycling rate that, according to the EPA, increased from 6 percent of trash in 1965 to 33 percent last year.

In the South Sound, the sudden drop in recycled metal prices put an unknown number of independent junk collectors and haulers out of work.

“The entrepreneurs who were out there beating the bushes for junked cars and old refrigerators won’t be doing it anymore,” said Jim Woods, director of public and education relations at the Steel Recycling Institute.

Do-it-yourself scrap collectors, regardless of their environmental beliefs, performed an important social function, recyclers say.

“They may not strap their load down properly,” Glucoft said. “They may not have four perfect tires. But they’re a big part of the cleanliness of this country.”

Prices for scrap vehicles, which last year were as high as $300 have dropped to less than $50, said one independent Tacoma scrapper, who specializes in recycling car bodies but didn’t want his name used. The price for worn-out car batteries has dropped from $10 to $4.

STORAGE ISSUE

Ups and downs are a normal part of the recycling business, said Bruce Savage, vice president of communications at the Institute of Scrap Recycling Industries (ISRI), a trade association based in Washington, D.C.

“Commodities, by their nature, are cyclical,” Savage said, “but usually, when foreign demand goes down, domestic demand goes up.

“This time, both domestic and foreign markets are down at the same time. It’s the most precipitous and synchronous drop we’ve ever seen.”

“Prices have gone down because demand has gone down,” Savage said. “When consumers are not buying, companies are not manufacturing.”

Recyclers and junk dealers are facing cash flow problems, he said, but they’re also facing a lack of space. If their strategy is to buy and hold, assuming prices eventually will come back up, they risk running out of room.

“Most yards are not that big, so they can’t have huge inventory building up,” Savage said. “The question recycled materials brokers face becomes, ‘How long do you inventory and store?’”

That concern is less a factor with used metals than it with other recycled materials, recyclers say. Paper from the Northwest that was sent to China to be turned into cardboard boxes is no longer needed there. It takes lots of room to store and deteriorates quickly.

“Chances are, a lot of it (paper) will end up going into the landfill,” Savage said. “Metals have much longer life. They can kind of hang around and be processed a year from now.”

The Institute of Steel Recycling is in the process of surveying its members to find out how many layoffs have occurred. If the economy doesn’t improve soon, Savage said, he expects unemployment numbers to correspond with price reductions.

“So far,” he said, “we’ve heard of reductions in work forces but very limited numbers of outright closures.”

In Tacoma, Calbag has so far been able to avoid large-scale layoffs, Glucoft said.

“The only thing we’ve eliminated was a small night shift,” he said. They represented just three out of the company’s 35-person work force, he said.

HOPING FOR REVIVAL

Metal recyclers are regarding President-elect Barack Obama’s promise of a multibillion-dollar infrastructure revitalization program with great hope.

“Enough major projects would revive the industry,” Savage said. “New roads, bridges and buildings are all going to use steel.”

Historically, Savage said, metal recyclers have always maintained faith in the cycle of prices, believing in bad times that good times would eventually return. “The feeling has always been, “It’s not a question of ‘if,’ it’s ‘when,’” he said.

This particular downturn, however, is testing the resolve of even the most steadfast optimists, Savage said.

“This last cycle has been so dramatic, nobody knows quite what to think,” he said. “It’s been such a dramatic and unheard-of drop, people don’t know exactly how to anticipate what the next course will be.”

Rob Carson: 253-597-8693