Bright contrast in a dim setting

Recycled materials remained in demand throughout the year, though in most secondary commodity markets, not necessarily enough to prompt rising prices.

For some, the stable pricing landscape that characterized the bulk ferrous scrap and old corrugated containers (OCC) markets might have been welcome. However, margin-boosting price spikes largely were absent in those two markets.

In the plastics recycling sector, what has been viewed as positive momentum spurred by corporate and government commitments to underpin the market has stalled considerably.

But the nonferrous metals sector showed the most price volatility. Even though financial markets had a hand in some price movements, global demand for recycled aluminum and copper appeared strong throughout the year, with added melt shop capacity painting an increasingly bright picture.

Stagnancy in steel

The value of ferrous scrap in the U.S. in the first 11 months of the year rarely moved upward, providing processors with none of the increased inventory values that intermittently can lead to a comfortable trading margin.

Using Pittsburgh-based MSA Inc.’s Raw Material Data Aggregation Service (RMDAS) prompt industrial composite grade as a measuring stick, that prime ferrous scrap grade traded at more than $500 per ton to start the year. The value of prime scrap steadily worked its way down to $395 per ton in the summer and early fall before finally seeing a slight upward tick to $404 per ton in the October trading period.

Metal recycling and electric arc furnace (EAF) steelmaking companies alike reported increasingly narrower profit margins—if not outright losses—as the year progressed.

From his vantage point in Detroit, Ken Schutt of Kimmel Scrap Iron & Metal Co. can gauge scrap generation from the automotive industry in particular and the manufacturing sector overall. On the demand side, domestic mill negotiations are most pertinent for a company that deals in prime scrap grades, and the company’s chief operating officer calls 2024 “a very trying and difficult year.”

“The ability to maintain margin has been difficult,” Schutt tells Recycling Today in mid-November.

“To see a one-month increase of $50 or more, I think a few things would need to happen. There needs to be a return of a steady stream of confidence in manufacturing. We also need to see a return to steel consumption. I don’t see a $50 move upward anytime soon.”

Like Schutt, executives at publicly traded metal recycling and steelmaking companies pointed to eroding demand for finished and semifinished steel—plus hiccups in scrap generation on the supply side—in remarks accompanying their earnings reports.

“We felt the impact of increased macroeconomic and political uncertainty,” Peter Matt, president and CEO of Irving, Texas-based CMC, said in comments accompanying the company’s June-through-August quarter. “Though strong by historical standards, our financial results were hampered by weaker sentiment that negatively influenced steel product pricing and margins.”

That sentiment veered sharply from his comments that accompanied CMC’s results that covered the financial quarter that ended Nov. 30, 2023.

“Performance in our North America Steel Group was supported by sustained healthy construction activity,” Matt said at the time.

While profits could be found for steelmakers and scrap processors this year, the universal sentiment portrayed disappointment and the extreme effort needed to maintain an operating margin.

Nonferrous capacity surges

Among secondary commodities, established nonferrous grades might have lived up to or surpassed demand and pricing expectations far better than most of their globally traded counterparts.

At Scrap Expo in mid-September in Louisville, Kentucky, panelists discussed investments in the recycled-content aluminum sector, like sorting technology and melt shop capacity expansion projects.

A $2.2 billion investment by Indiana-based Steel Dynamics Inc. (SDI) in a recycled-content aluminum sheet mill has spurred an additional $29 million investment in Mississippi by Kentucky-based Owl’s Head Alloys.

Owl’s Head President Mike Boyle said its site in West Point, Mississippi, will support the SDI subsidiary Aluminum Dynamics by providing as much as 225,000 tons of recycled-content metal per year by processing scrap Aluminum Dynamics can’t handle and its dross.

Other major investors in the space include Atlanta-based Novelis Inc.

Beatriz Landa of Novelis told Scrap Expo attendees construction continues on the company’s 600,000-ton-per-year recycling and rolling plant in Bay Minette, Alabama. Novelis anticipates a deficit between scrap supply and demand, which it is trying to address through an alliance with Indiana-based Sortera Technologies.

The story on the red metals side was similar, with the International Copper Study Group (ICSG), Lisbon, reporting increases in secondary copper production in 2023 and throughout 2024.

When the Non-Ferrous Division of the Brussels-based Bureau of International Recycling (BIR) convened a few weeks after Scrap Expo, the potential scarcity of aluminum and red metal scrap again was a topic of discussion.

Speakers referred not just to American capacity expansions but also those in Europe and the Association of Southeast Asian Nations region.

As measured by the COMEX price, copper started the year around $3.80 per pound before soaring to an average May price of more than $4.77. Although supply and demand played a role in the volatility, so too did financial speculators, according to those like John Gross of “The Copper Journal.”

Subsequently, the COMEX price fell again in the summer and rebounded in September and October. Processors and traders spent the year undertaking risk aversion maneuvers to ensure their trading margins remained in place.

On the aluminum pricing side, the London Metal Exchange (LME) cash buyer aluminum alloy price started the year at $1,866 per metric ton in January. In October, it averaged $2,212 per metric ton as a cash buyer price.

With speculation less of a factor in the aluminum sector, recyclers could have good reason to believe aluminum scrap can remain a seller’s market.

Fiber explores new pathways

Along with plastic, trade barriers erected several years ago by China have had the greatest impact on the value of and trading patterns for recovered paper.

Unlike the direst of predictions, the global market for OCC and other benchmark grades did not collapse after China restricted the import of recovered paper.

However, 2024 was another in a series of years where the global post-China restrictions market continued to display how recovered paper was finding new routes between points of generation in nations with developed economies and places in Asia where manufacturing for export consumes containerboard and other packaging board grades.

In the U.S., a big part of the story continues to be growth of recycled-content containerboard capacity. According to Washington-based American Forest & Paper Association data Fastmarkets cited in a September webinar, total recovered fiber consumption in the first half of this year at U.S. mills increased 6.8 percent, or more than 1 million tons, compared with the same period in 2023.

During the webinar, Hannah Zhao of Fastmarkets indicated U.S. mills consumed 8.2 percent more OCC in the first half of this year compared with the first six months of 2023, while mixed paper consumption increased 3.9 percent.

Although mixed paper was deemed by some observers to have a precarious future once the China option disappeared, more than 1.9 million tons arrived at U.S. mills in the first half of this year.

While domestic demand supplied some price support, it was offset by declining export numbers in the first half of 2024. According to Fastmarkets data, U.S. OCC exports dropped by 11 percent in the first half of 2024. Exports to Asia declined by 18 percent, with Fastmarkets citing a sluggish Asian paper packaging market and overall weak demand.

A presentation by Jun Park at the BIR Paper Division meeting in late October provided an update on the transoceanic trade that continues.

Park, who manages the Singapore office of the Switzerland-based Vipa Group, presented data showing the U.S. will export more than 9 million tons of recovered paper this year, while the European Union will ship more than 5 million and Japan more than 2 million tons.

India is set to be the top destination for exported U.S. and European recovered paper this year, followed by Malaysia, Vietnam and Thailand. Mills in Vietnam and Taiwan are eager buyers of Japanese OCC, Park said.

Much of the OCC being sent to Asia is converted into recycled pulp acceptable at Chinese ports, keeping a link open between recovered paper-surplus regions and the still active Chinese market.

No leap forward for plastic

Environmental advocacy groups have long had ocean-bound plastic and low recycling rates atop their agendas, and earlier this decade, there were signals that government and corporate investments would help address the problem.

While some of those investments have led to higher collection and recycling rates for plastic, this year seemed to demonstrate that a global demand-driven economy for plastic scrap has not yet been established.

This fall, the Polypropylene Recycling Coalition of The Recycling Partnership (TRP), Washington, issued an inaugural report that acknowledged a current polypropylene (PP) recycling rate in the U.S. of just 8 percent. The better news, TRP says, is that its members have invested $15 million to help boost that rate.

The U.S. continues to rely largely on market-based incentives to boost the plastic packaging recycling rate, though several states have or intend to implement extended producer responsibility (EPR) programs, and California has set target dates for a recycled-content mandate.

Max Craipeau of Singapore-based Greencore Resources said the higher cost of recycled polyethylene terephthalate (rPET) has created negative impacts not only in Asia but also in Europe.

According to Craipeau, rPET has been trading for about $1,400 per metric ton in late 2024, while virgin PET can be obtained for just $900 per metric ton. Such a gap is an issue for buyers, he said.

Final figures should demonstrate that significantly more plastic was recycled in 2024 compared with 2023. Whether that momentum can be sustained into 2025 will be of great interest to stakeholders in the sector.

The author is senior editor at the Recycling Today Media Group and can be reached at btaylor@gie.net.