As the Recycling World Turns

Dire, bleak or perhaps even hopeless. Those were words that could have described the updates and forecasts presented by recyclers from throughout the world at the 1998 Spring Convention of the Bureau of International Recycling (BIR).

That event, held last May in Paris, was pervaded by a sense that scrap metal and paper markets were either at a low point or were spiraling downward.

As many of the same recyclers gathered this year in Rome, the prevailing mood was comparatively hopeful, even if not as sunny as the southern Italian skies.

FERROUS FUNK STARTING TO LIFT

Ferrous metals traders and processors who made presentations were not uniform in their opinions of the scrap market. However, there was a fair amount of optimism for the near-term future and a degree of certainty that the rebound from the bottom of the market was underway.

Some of the praise for the market could be classified as faint. “There is a long way to go before we catch up with the lofty levels of a year ago,” noted Edward Hollander of Hollander Metals Inc., Glenview, Ill., before adding that scrap prices were “trending upward.”

John Crabb of Simsmetal Limited, North Sydney, Australia, gave his view of how the Asian market for ferrous scrap is progressing. “Recent visits to the region lead me to believe that the worst is over and that in fiscal 2000,the region will start the long climb back to prosperity with countries such as Malaysia and South Korea registering positive growth rates.”

But Crabb also noted that Japan’s steel industry has suffered a major capacity cut, with production of steel “reduced by 15 million metric tons to an annual level of 83 to 84 million tons.” That drastic cutback has meant that Japan has become a significant exporter of ferrous scrap to nations such as Korea and Taiwan, thus making the market smaller for such traditional exporters as the U.S.

Despite the slump in Japan, Crabb was optimistic that the rest of 1999 should see continued improvement. “While I am not expecting miracles, I am quietly confident that we will enjoy a stronger Asian market in the months ahead.”

Russian scrap dealer Igor Kouzmine noted that international trade controls negotiated by the U.S. are being enforced by the Russian government. A 15% tax on scrap exports from Russia may well cause a number of bankruptcies of Russian scrap companies, according to Kouzmine. He estimates that scrap recovery in Russia may decline by as much as 25% in 1999.

A quota system established by the Ukraine may similarly slash ferrous scrap exports coming from that country, Kouzmine added.

STILL SOME NONFERROUS TREPIDATION

In the nonferrous segment, speakers from several different nations expressed disgruntlement over the difficulty of finding adequate volumes of scrap materials.

Robert Voss, of Voss International Ltd. in the U.K., called scrap supplies there “generally tight,” and noted that even in Britain’s recessionary economy there are “too many consumers chasing too small amount of scrap.”

Unfortunately—just as in North America—the tight supply has not triggered a significant uptick in prices being paid by consumers. David Corcoran of NECP Ltd. in the U.K. opened a session for cable and wire processors by stating that, “it’s been a difficult year for everybody in regard to metal prices. Most low-grade cables are not having the value to allow them to be processed.”

Another processor from the U.K. also at the meeting expressed his dismay at being unable to outbid Asian competitors for scrap wire and cable. Indeed, David Chiao of Uni-All Group Ltd., Atlanta, said the market for nonferrous metals in China is “always the best in the world.”

Chiao noted that Shanghai Metal Exchange pricing for copper has recently been running some 17.5% higher (at times more than $300 per ton) than LME pricing. Alan Liu of Western Trading Co., San Gabriel, Calif., noted that LME prices “have minimal effect” on markets in China.

That is of little consolation to processors in the rest of the world who must tie their trading prices to the LME. “Aluminum scrap is in very short supply,” stated Robert Stein of Louis Padnos Iron & Metal Co., Holland, Mich. He noted that a combination of factors ranging from aluminum’s gains in the auto components sector to the shutdown of some auto shredders has created the current set of circumstances. “This may be a longer-term situation that is not solved by virtue of price alone,” he stated. “Increased use of aluminum in automobiles, for example, will result in demands for scrap that will outstrip supply, and secondary smelters will pursue those qualities of scrap that in recent years have been used by the primary mills. ”

PAPER MARKETS ON THE MEND

It is overdue, most in the scrap paper business would probably contend, but stronger pricing seems to be the trend for many paper grades.

“In April, we started to see prices increase for most grades as demand picked up domestically and continuing improvement in the export markets, especially to the Far East/Pacific Rim region,” Steve Vento, Recycled Fibres International, Sunrise, Fla., reported to the BIR Paper Division. (Vento was not there in person, but his remarks were read to Paper Division conference attendees.)

Across the ocean, pricing for many grades of secondary paper also began picking up in the second quarter of 1999. “When we last met in October in Brussels, the market situation was relatively somber,” remarked H. Maarten Kleiweg de Zwaan of BPB Recycling Ned., Rotterdam. “However, I am now glad to report that the situation has improved. Exports of low grades to the Far East from mainland Europe, especially through Rotterdam, have picked up significantly from the spring onwards.”

REGULATIONS AND RESTRICTIONS

Reports on European Union and Basel Convention legislation, rulings and negotiations were also a topic of conversation at the Spring Convention. The BIR presented a summary of a symposium it held in early 1999 on “The Status of Secondary Raw Material,” and “When Waste Ceases to be Waste.”

The primary objective from the BIR’s point of view has been to ensure that international trade negotiators begin viewing scrap metal and paper as industrial feedstock and not as waste. The international trade implications of that difference are becoming increasingly more important as the flow of waste across international borders and over international waters becomes increasingly scrutinized and regulated.

In addition to concerns over potential trade barriers, scrap metal recyclers in many European nations are facing strict regulations and targeted taxes. Shredder operators in particular are encountering regulatory hurdles, both from proponents of auto disassembly and from regulators concerned about noise, dust and the creation of non-recyclable auto shredder residue.

Sidebar

AN AMERICAN IN BRUSSELS

The presidency of the Bureau of International Recycling (BIR), Brussels, changed hands at the 1999 Spring Convention.

Anthony P. Bird, Simsmetal UK Ltd., Stratford-on-Avon, United Kindgom, concluded his term as president and the title was passed on to Barry Hunter of Keywell LLC, Port Elizabeth, N.J. Hunter has spent nearly two decades as chairman of the BIR’s Stainless Steel and Special Alloys Committee, which he helped form in 1979.

In his first address as BIR president, Hunter recalled how as a young man just starting out at his family’s scrap yard in Passaic, N.J., he was fascinated by magazine articles summarizing BIR events—meetings between people from all over the world taking place in far away places.

Hunter thanked his current employer Keywell for its willingness to let him take an active role in BIR’s leadership for the past several years, and also thanked his father, grandfather and other family members who passed on their decades of knowledge and taught him the fundamentals of the scrap market.

After acknowledging his predecessor Bird as a man of “boundless energy” who took the offensive on legal matters, Hunter gave his views on where the BIR stands and what directions it needs to explore.

He said that he begins his term “at a time, in many respects, when our industry faces its biggest challenge—perhaps its very survival.”

Referring to the battle to establish scrap metal and paper as industrial feedstock rather than waste, Hunter said that the “BIR must continue to take an aggressive lead on environmental and legal issues on behalf of our membership.”

Hunter also remarked that he would like to see the organization do what it can to provide business leads and promote trading between member companies. “We must also emphasize the commercial opportunities that are available through participation in this organization,” he stated.