Graham Rollo, of Otago Metals, said the industry was facing a "major crisis" as overseas and domestic scrap buyers dwindled.
"I've never known a time when we couldn't sell scrap.
''We might be waiting several weeks before, but now it's completely dead.
''The worst-case scenario [for the industry] would be job losses.
''But everyone's in the same boat - we just have to ride it out."
Scrap demand dropped in recent months as China completed its Olympic Games construction.
The global credit crisis meant some international buyers failed to secure letters of credit for "boat-loads" of scrap and consumption of Chinese-made products, based on recycled metals, had fallen in the United States building, automotive and electrical industries, he said.
Reduced demand would mean members of the public were paid less for scrap.
In recent months, the company paid up to $400 a tonne for top grade steel but was now buying it at just $50 a tonne.
Copper, recently bought for $5 a kg, was now fetching only $1 a kg.
Everitt Enterprises manager Peter Everitt, of Dunedin, said the company was still buying scrap from industrial and public vendors, but at reduced rates.
"There's no demand from anywhere in the world.
''Since June, we've stockpiled about 1000 tonnes and usually we try not to keep those quantities.
''Everyone's on the same wagon because this is global."
He said "workers are aware of the situation" but management had not discussed job cuts.
Up to 600,000 tonnes of steel is recycled in New Zealand each year, about 50% of which is exported.
South Island steel mainly went to Asia.
