Addressing Challenges

The Institute of Scrap Recycling Industries Inc. (ISRI) 2013 Convention and Exposition, held April 9-13 in Orlando, Fla., at the Orange County Convention Center, featured a diverse array of educational sessions addressing topics as varied as ferrous scrap markets, plastics identification, electronics recycling and the benefits of Recycling Industry Operating Standard (RIOS) certification. The convention also featured international summits on electronics recycling and a meeting of the U.S.-China Scrap Trade Consult. The range of programming as well as the multiple networking opportunities and the destination helped to draw attendees out for the show, which, according to convention organizers, marked ISRI’s third-largest convention—and the largest attendance outside of Las Vegas—with more than 5,200 attendees.

Celebrating Victories, Addressing Challenges
The April 10 opening general session provided an overview of the development of the scrap recycling industry in addition to highlighting recent advances and areas that require further progress.

ISRI Chairman Jerry Simms of Atlas Metal & Iron Corp., Denver, acknowledged a recent regulatory triumph for the industry, noting that ISRI successfully obtained approval to recycle the plastics recovered from auto shredder residue from the U.S. Environmental Protection Agency after convincing the agency the practice did not endanger the health or safety of workers or the environment. This was welcome news to plastics recyclers and auto shredder operators.

Simms also stressed the importance of safety, adding that ISRI members needed to do a better job of emphasizing safe operations, as the industry is the fourth deadliest in America according to figures from the U.S. Department of Labor Occupational Health and Safety Administration.

Following Simms introductory remarks and honors bestowed to Arnold Gachman of Fort Worth, Texas-based Gachman Metals and Recycling Co. (See “Personnel Notes,” page 134) and Francis Veys, the retiring general director of the Brussels-based Bureau of International Recycling, former governors Ed Rendell, a Democrat from Pennsylvania, and Haley Barbour, a Republican from Mississippi, shared their views on the current political landscape in Washington, D.C. Despite their differences of opinion, both men stressed their long-time friendship and mutual respect.

Barbour’s association with the scrap recycling industry dates back to the days of the Superfund battle, when his lobbying firm, Barbour Griffith & Rogers, assisted ISRI in “Operation Breakout,” which was the scrap recycling industry’s strategy to win Superfund relief for recyclers of metals, paper, plastics, glass and textiles.

Regarding today’s political climate, Barbour said the government is a reflection of divided politics. He added that President Barack Obama’s campaign during the 2012 general election sought successfully to make Mitt Romney, the Republican candidate, unacceptable to the electorate. While the majority of voters polled said they felt Romney would be better for the economy, 81 percent of those in exit polling said Obama cared for “people like me.”

The current electorate is the “most polarized” Barbour said he has “ever seen,” adding, “Washington magnifies that.”

However, he said this political division does not have to lead to gridlock, pointing to former U.S. presidents Ronald Reagan and Bill Clinton and what they were able to accomplish when control was split among the parties. “Reagan and Clinton thought like governors in that it was their job to get things done,” Barbour said.

Rendell said Obama’s track record as a leader has been mixed, as he has done well in some areas and not in others. “You know he is exercising leadership by the response to his proposed budget,” he said. “He is getting grief from both sides.”

Among the pressing issues Rendell said need to be addressed are the national debt, immigration, gun violence, energy, infrastructure, education and health care.

He pointed to the need to reform entitlement programs, saying, “Medicare and Social Security were never meant to cover 20 years.”

Rendell also said the federal government needed to start investing in the nation’s growth by ending subsidies for companies such as Exxon Mobile, which records record profits year after year.

He closed by mentioning his book, A Nation of Wusses: How America’s Leaders Lost the Guts to Make Us Great, which encourages political leaders to stand and defend what they believe in, even if it means not winning re-election. “There are some things worth losing for,” he added.

Subsequent sessions at the ISRI conference narrowed the perspective to topics currently affecting recyclers in the United States, such as China’s recently erected Green Fence.

China's Green Fence
In early 2013, shippers of secondary commodities to China have slowly begun to learn about “Operation Green Fence,” an effort by Chinese environmental and customs officials to more vigorously inspect (and more willingly reject) what they consider to be subpar container loads.

At the U.S.-China Scrap Trade Consult Meeting during the ISRI Convention and Exposition, those in attendance learned a little bit more about this developing issue.

Wang Jiwei, vice president and secretary general of the China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA), referred to Operation Green Fence as a 10-month effort by China’s national customs agency “to strengthen the supervision” of environmental standards. According to Wang, the Green Fence initiative will run from February to November 2013 and will focus on random inspection of all forms of “imported waste,” meaning metallics, plastics, textiles, rubber and recovered paper.

Wang said the initiative does not involve new regulations but “strengthens Article 12,” which was issued in April 2011. (That article states: “In the process of importing solid waste, measures shall be taken to prevent it from spread[ing] seepage and leakage or other measures to prevent pollution of [the] environment.”)

He said the intention of Operation Green Fence is in part “psychological” in ensuring shippers know China will “strictly examine the import application and [consider whether] to approve the import license” of shippers who are caught sending substandard material.

In his presentation, the CMRA’s Wang showed photos of inbound containers whose shortcomings went beyond liquid contamination. Problems presented in Wang’s photos included living mice, bullets and combustible flares included in a container load of juice boxes. “These prohibited materials are not allowed to enter China,” he said.

Severe interruptions in scrap shipments to China are bound to have a significant effect. Speaking at a different ISRI Convention session, Liu Shengming of the China Certification & Inspection Group (CCIC) noted that the number of containers filled with scrap materials continued to grow from 2010 to 2012.

Liu said North America sent 698,000 containers filled with scrap materials to China in 2012, up from 635,000 in 2011 and 570,000 in 2010. Only 0.04 percent of those containers were found to be “unqualified,” according to Liu.

By volume, recovered fiber was the foremost commodity shipped in 2012, followed by plastic scrap and nonferrous metals.

The Outlook for Ferrous Scrap
Ferrous scrap is another material that is frequently shipped to China as well as to other overseas destinations in addition to feeding domestic mills in North America. Speakers addressed the changing nature of ferrous scrap markets during the Spotlight on Ferrous session, held April 11.

Phillip Hoffman, vice president of U.S. ferrous scrap trading for Medtrade, the U.S. subsidiary of Turkish steel producer Colakoglu Metaluji, said 1.56 billion metric tons of steel were produced worldwide in 2012 using 579 million metric tons of ferrous scrap. He added that U.S. scrap exports accounted for nearly 21 percent of this material, with nearly 20.90 percent of scrap shipped from the United States destined for China.

Turkey is another popular overseas destination for U.S.-generated ferrous scrap, with Hoffman saying 27 percent of scrap imports to the country are from the United States. Turkey continues to add steelmaking capacity, despite excess industry capacity on a global scale, Hoffman added.

In terms of the U.S. market, he said 10 scrap processors control 63 percent of the market, while four processors control 40 percent of the seaborne trade.

Sachin Shivaram, general manager, metallics purchasing for the steel company Severstal NA, Chicago, spoke about his company’s approach to purchasing ferrous scrap. Severstal ships some 5.5 million metric tons of steel per year and purchases 3.5 million metric tons of scrap metals.

Shivaram said the company’s ferrous scrap purchases are guided by steel pricing, with Severstal preferring to purchase material consistently throughout the month rather than at the beginning or end of the month. “The impression now is if I buy scrap midmonth, I am desperate for scrap,” he said. “That is not the case.”

He told attendees, “If you are not selling scrap in the middle of the month, you are missing out on a dynamic market.” Shivaram added that there is value in having more chances to transact purchases throughout the month.

Some buyers and sellers of ferrous scrap have been using risk management tools to hedge their purchases. According to speaker Spencer Johnson of Intl-FCStone, New York City, ferrous scrap risk management has experienced considerable changes in the last 12 months with the advent of the CME U.S. Midwest scrap futures contract. While he said scrap futures contracts are not fully developed in terms of liquidity, he added that this creates both opportunity and risk for traders.

Johnson said that traders who take an opposite position in the physical market than they take in the futures market risk the difference between the two prices.

In terms of pricing for No. 1 busheling scrap, he said he expected to see some backwardation between the present and the fourth quarter of the year but added that prices should pick up later.

During the Q&A portion of the session the topic of shredder overcapacity was raised by an attendee. Hoffman said there was no doubt that the number of shredders and scrap yards were increasing, causing competition to heat up among yards and squeezing margins. As a result, he said the spoke-and-hub approach to shredder operations may be giving way to smaller, portable shredders.

Shivaram added that he felt the market was reaching saturation, adding that shredder operators are right to put in capacity in an effort to maximize freight.

Pathways for Plastics
The session Plastics from Construction and Demolition Debris at the 2013 ISRI Convention and Exposition looked at the potential growth of this sector. Paul Degnan of E.L. Harvey & Sons, Westborough, Mass., and Todd Byrum of Butler Paper Recycling, Suffolk, Va., each provided attendees with knowledge gained from their experience of seeking end markets for plastics generated at C&D job sites.

Session moderator Brian Taylor of the Recycling Today Media Group provided a partial list of plastic items commonly found in the C&D stream, including:

• Carpet and padding;
• Plastic film;
• Tarps and sheets;
• PVC (polyvinyl chloride) pipe;
• PVC siding;
• Drywall and paint pails;
• Corrugated tubing (as used for irrigation and drainage);
• Plastic and composite fencing and decking; and
• PET (polyethylene terephthalate) water and soda bottles.

“We see a lot of pails and old buckets,” said Degnan regarding one form of plastic entering E.L. Harvey’s mixed C&D facility. Such materials increasingly have a domestic home rather than having to be exported, Degnan observed. “There are more opportunities for regrinders here, and domestic markets have definitely developed.”

Degnan added, “There have been significant investments” made in plastic scrap grinding, reprocessing and consumption in the United States. “The demand for postconsumer resins is really driving this; there has been a big push.”

Degnan said just 33 percent of rigid plastic scrap was being recycled when E.L. Harvey opened its mixed C&D facility in 2007, but by 2010 that recycling rate had grown to 61 percent.

Byrum said one of Butler Paper Recycling’s challenges is regional. “Virginia is a trash state,” he stated, noting that the state is a net importer of solid waste and that its tipping fees can be as low as $23 per ton.

Despite the low cost of landfilling, there is global demand for plastic scrap that has created export markets, as well as a desire by U.S. manufacturers to use recycled content in their products, Byrum said.

As attendees learned at this year’s ISRI Convention and Exposition, challenges and opportunities await recyclers in a number of areas in 2013. Those eager to learn more should mark their calendars for the 2014 ISRI Convention and Exposition, which will be April 6-10 at the Mandalay Bay Resort and Casino in Las Vegas.

The authors are editor and managing editor of Recycling Today.