They have basically said
We will reject it for visual impact if you have privacy screens.
We will reject it for overlooking if you don't.
They were pretty clear in saying they don't want roof terrace type developments anywhere in Lewisham, and permitting us would be precedent.>
Seems pretty reasonable from their point of view, unfortunately for you. The scrapyard next door is irrelevant as it already has established use and besides your proposals have no relevance to the scrapheap. Now if you were proposing to erect a privacy screen in front of the scrapyard...
Not sure an appeal will get you anywhere if I'm honest unless either you can demonstrate precedent in the area, always worth searching the planning records.