Editor's Focus

Will there be a shortage of scrap materials?

There has been some fear of shortages, in both the ferrous and paper markets, for some time, as more steel minimills and paper deinking mills have come on line and demand for material has been strong.

Some analysts – especially on the ferrous side – argue that strong demand leads to higher prices for materials, motivating collectors and processors to collect materials that might not otherwise find their way to a scrap yard due to the cost of extracting or transporting them. There is enough scrap, they say – it’s more a matter of how much the market is willing to pay for it, and how hard processors are willing to work to get it.

On the paper side, there’s a need to figure out how to access more post-consumer fiber as minimum content requirements for manufacturers increase. At the same time, the structure of the market is changing, according to George Henson, vice president of Weyerhaeuser Recycling, profiled this month in Recycling Today. More people are working from home offices and shopping at home, thus decentralizing the generation of paper. More work has to be done, says Henson, to figure out how to access that material.

End consumers of both ferrous metals and paper are going to greater lengths to assure a steady supply of material than before. Some steel mills – most noticeably, Schnitzer – acquired sufficient new scrap yards during 1994 so that it would not have to face the threat of insufficient scrap supply.

Various paper companies, such as Weyerhaeuser, also have their own scrap paper collection and processing divisions. Weyerhaeuser Recycling has also developed another strategy to assure collection of sufficient fiber supplies – the formation of its Waste Integration Service Center.

Through this service, Weyerhaeuser handles a given business’ complete disposal and recycling needs, acting almost as a broker for the non-recyclable waste and processing scrap paper and other recyclables directly.

"By merging your waste-management and recycling operation into a larger negotiating group, we’re able to secure the lowest costs for hauling and the highest revenues for recyclable commodities," says a Waste Integration Service Center brochure.

Although this service provides convenience to the paper recycler’s customers, it also assures supply to Weyerhaeuser, while expanding the markets the company is able to serve.

Creative strategies like this may become standard, as recyclers compete for a limited supply of materials and consumers are increasingly aware that their survival depends on their access to sufficient materials at a reasonable cost.

In the end, it’s still not certain whether there will be an actual shortage of either ferrous scrap or scrap paper. But prudent end consumers will find a way to get the materials they need, and scrap processors should be on top of trying to assure that supply.