Nonferrous Chorus Meets with Mixed Reviews

The metals industry—and by extension the scrap industry—covers a broad spectrum of materials made from a variety of metallic elements.

The number of alloys that can be brought over the scale of a scrap yard are numerous, and a healthy percentage of them are placed into the nonferrous category—even some of them bearing iron—depending on which metal is considered to be the key pricing element.

In any given year, some portions of this scrap stream will be considered more desirable than others, and 1999 has been no exception.

A NICKEL’S WORTH OF SCRAP

The construction industry and the consumer economy have been healthy in North America for much of the 1990s, making demand for stainless steel steady. The nickel-bearing alloy is also found in the transportation segment, which has enjoyed success during much of this decade.

Demand alone, however, does not dictate the price of a material, and the stainless scrap markets have at times suffered from an oversupply of nickel.

As often happens when an ongoing oversupply situation lingers for a given metal, eventually a certain amount of nickel mining and plant capacity began to shut down, which raised prices. And better pricing usually means better flows of scrap.

"The market has been on the rise, so it’s easier to buy material," says Lou Rivera of Galamet Inc., Kansas City, Mo. He notes that per ton prices have risen in 1999 from a low of $450 per gross ton to a high of $615 per ton. "You’re talking about a difference of seven cents per pound," says Rivera. "That kind of movement upward brings in material."

At the consuming end, stainless scrap processors in some parts of the country received distressing news in July when AK Steel Corp., Middletown, Ohio, announced plans to cut back its stainless steel production and shut down one or more mills. AK Steel is in the process of acquiring Armco Inc., Pittsburgh, and will reportedly greatly curtail production at Armco’s Mansfield, Ohio complex.

Those announcements have not been the first to signify some consolidating and production cutbacks within the stainless steelmaking segment. In January of this eyar, Bethlehem Steel Corp., Bethlehem, Pa., announced that it would be closing two stainless mills (one in Pennsylvania, the other in Ohio) that it had acquired as part of its purchase of Lukens Inc. in 1998. The plant closings may finally have triggered price increases for mill products starting this July.

ZINC

Zinc has benefited from several trends in the 1990s, most notably as the key ingredient in steel galvanizing processes. Combined with sustained brass markets (brass is an alloy created from copper and zinc), the zinc air battery market, and new uses in products ranging from insect repellents and sun screens to cough drops, zinc has enjoyed stable or growing demand throughout the decade.

A yearly outlook for zinc looking ahead to 1999 activity prepared by the United States Geological Survey, Reston, Va., notes that "according to industry experts, the zinc market, in the long run, has one of the healthiest fundamentals of all base metals."

The summary goes on to note that, regarding supply and demand for the metal, zinc "is the only major metal market that has remained in deficit in 1998."

The report notes that while some new mining capacity is indeed being prepared to come online, Colorado’s last major lead-zinc mine in Leadville closed in early 1999.

The new capacity, however, is significant enough to have brought prices down.

Zinc smelters have stayed busy and zinc scrap, or recovered zinc in other forms, is in demand there. Several different projects have been funded to use new technologies to maximize zinc recovery from the obsolete automobile stream.

Currently, most galvanized auto body scrap is shredded and shipped to steel mills, where some zinc oxides can be recovered as a byproduct of the steelmaking process. What some recyclers are trying to do in a cost-effective way is recover the zinc before it gets melted in the steelmakers’ electric arc furnaces.

MAGNESIUM

Recyclers of both prompt scrap and, eventually, obsolete scrap may soon be seeing more magnesium showing up at their facilities.

The lightweight metal is beginning to attract a fair amount of attention in the automotive segment, where the practice of "light-weighting" vehicles for better fuel mileage remains a consideration.

Automakers such as Ford are beginning to use more magnesium in their vehicles, and Volkswagen produces some engine parts from magnesium. According to a report in the Wall Street Journal, Ford Motor Co., Dearborn, Mich., is planning to increase the use of magnesium in its vehicles to an average of 250 pounds per vehicle. Magnesium will be found in such automotive parts as the steering wheels, seat supports, instrument panels and air bag canisters.

PRECIOUS METALS

Despite the misfortunes of gold, which has spiraled downward in value through much of 1999, precious metals still deserve their status as metals whose worth is measured by the ounce.

Gold remains a metal used in several electronics and industrial applications and one that is valued by refiners despite its relative pricing problems.

Platinum and palladium have increased their presence in the metals market over the last three decades due to the proliferation of catalytic converters in the automotive market. Both metals not only trade at attractive prices for dealers, but also provide a reliable flow of material for those who choose to collect automotive converters for scrap.

Palladium consumers were heartened to learn in July that Russia’s central bank had reached an agreement with Norilsk Nickel, the world's largest palladium producer, to help stabilize Norilsk’s financial footing and increase the likelihood that the company would soon begin exporting palladium on a more reliable basis. Scrap dealers, on the other hand, may have preferred the premiums being paid for their comparatively reliable flow of scrap palladium material.

Silver has established itself as an important material in photographic and electronics applications, as well as retaining its traditional roles in jewelry making and decorative objects. Silver pricing may have peaked in 1980 at $50 on the London Metal Exchange (LME) before falling steeply within the next two years. Currently it trades in the $5.25 per ounce range.

A feature in the LME’s publication, The Ringsider, notes that for the past 45 years silver demand has outpaced mined silver supply. This has allowed recycled silver scrap to grow to represent 18% of the total silver supply in 1997—a figure of 142 million ounces. Not surprisingly, the U.S. is the largest recycler of silver, with Germany and Japan following.

In the U.S., two-thirds of the silver scrap recovered comes from the photographic segment. It is a recycling segment that, while not immediately threatened, does face a long-term question of viability if digital photography and images transmitted via e-mail become increasingly more prevalent versus the silver-coated film processes that have been in place for decades.

SPECIALTY METALS

They aren’t well known to those outside the metals industry, but specialty metals such as titanium, manganese and molybdenum are recognizable to most scrap dealers.

Used primarily as alloying agents with steel, the presence of specialty metals in an alloy makes such scrap unwelcome at most steel mills, setting them on a separate course from most iron scrap and also creating a separate pricing structure.

Demand for molybdenum and ferro-moly alloys, by most accounts, has been down in 1999 and was also weak in 1998, especially in Japan. Through much of this time, production of molybdenum has remained steady, with a great deal of the metal being exported by China. That may be changing in late 1999, as some copper mines that also produce molybdenum have cut back production or closed, and Chinese exports are also expected to decrease.

Titanium enjoyed a boom for a few years due to its use in high performance golf clubs. Unfortunately, forecasters and speculators did not take into account that the titanium clubs would last a lot longer than the wooden-headed clubs they were replacing. Thus, after an initial burst of activity, the demand for titanium clubs flattened and then declined.

Titanium’s other major market in the aircraft industry has consolidated to the point where two large customers dictate the demand for the metal in that segment.

Earlier this year, a titanium scrap dealer told Recycling Today, "The market is deader than I’ve ever seen. You have to be very creative with your marketing at times like this."