Scrap Industry News

Nucor Acquires DJJ

Nucor Corp. has signed a purchase agreement to acquire the stock of SHV North America Corp., which owns 100 percent of The David J. Joseph Co. (DJJ), its related affiliates and real estate, for approximately $1.44 billion. DJJ will be a wholly owned subsidiary of Nucor Corp., Charlotte, N.C., and will maintain its headquarters in Cincinnati.

"We are extremely excited to announce the acquisition of a company that has been our partner in growth for the last 38 years," Daniel DiMicco, chairman, CEO and president of Nucor, says. "With its considerable scale and excellent management team, DJJ offers Nucor a large platform for continued growth in this segment of the industry. We are very excited that the DJJ leadership team, led by Keith Grass, will continue in their current roles. The 1,700 strong and highly successful members of the DJJ organization have always been part of the Nucor Team, but, now more than ever, they will help drive our success from within the Nucor Family."

The acquisition of DJJ, one of the leading U.S. scrap companies, will bring a variety of benefits to Nucor. In addition to DJJ’s scrap operations and expertise, its extensive brokerage operations provide Nucor with global sourcing of many key steelmaking raw materials.

DJJ’s rail services and logistics capabilities will allow Nucor to leverage the largest private railcar fleet in North America dedicated to scrap transportation. DJJ’s industrial scrap programs will provide improved raw materials channels to Nucor.

The addition of DJJ to Nucor’s current scrap processing capabilities will allow the company to process about 4 million tons of ferrous scrap annually.

DJJ, founded in 1885, has been the broker of ferrous scrap to Nucor since 1969. Currently the company has five main businesses—brokerage services, scrap processing, mill and industrial services, rail services and self-service auto parts. Last year, the company brokered more than 20 million tons of ferrous scrap and more than 500 million pounds of nonferrous materials. The company expects to process more than 3.5 million tons of ferrous scrap this year, using 12 shredders in 35 yards.

Schnitzer Acquires Georgia Recycler

Schnitzer Steel, based in Portland, Ore., has acquired J.T. Knight, a privately owned Columbus, Ga., scrap recycler, through its Schnitzer Southeast LLC subsidiary, according to local press reports.

J.T. Knight has one yard and traditionally has focused on the nonferrous market. However, as a part of Schnitzer, Rick Caldwell, president of J.T. Knight, says the company expects to grow its ferrous business. The J.T. Knight name will be retained, and Caldwell and his three partners will continue to manage the business.

"This acquisition complements our long-term growth strategy in the Southeast and enhances our position as a leading recycler of metals in the region," Don Hamaker, president of Schnitzer Steel’s Metal Recycling Business, says.

With the acquisition, Schnitzer Southeast now has 12 scrap metal recycling facilities in Alabama and Georgia, including those in Atlanta; Albany, Ga.; Selma, Ala.; and Dothan, Ala.

Scrap Metal Group Files Suit Over Metal Theft Ordinance

The Tennessee Scrap Recyclers Association (TSRA) has filed a suit in U.S. District Court challenging the adoption of a Memphis ordinance requiring recyclers to tag and hold incoming material.

"Despite excellent participation by all industry representatives in the recently completed Special Joint Committee to Study the Theft of Precious Metals, TSRA must take this extraordinary action," Dom Marchitto, president of the TSRA board of directors, says. "Tag and hold doesn’t work in solving the metal theft problem and threatens the viability of the scrap recycling industry in Tennessee."

TSRA notes that while the tag-and-hold policy has been a state law for 40 years, until the last few months, it has not been enforced.

Under the Memphis ordinance, passed in December, scrap metal dealers are required to obtain a permit from the city of Memphis to continue in business. Permits will be issued only if an applicant is in compliance with "all applicable laws," including the tag-and-hold policy.

The association says the tag-and-hold laws don’t effectively reduce metal theft and are disruptive to the scrap industry.

TSRA also notes that, despite a thorough inquiry by the Legislative Study Committee after a charge from the state legislature recommending that the tag-and-hold provisions of the state law be repealed, Memphis still adopted the ordinance.

Alcoa Announces Ambitious UBC Recycling Rate Goal

Alcoa has established a goal to raise the industry’s used beverage can (UBC) recycling rate in North America from the current 52 percent rate to 75 percent by 2015.

"The aluminum industry must work together for common sustainability goals that transcend individual commercial objectives, and we must approach this with a sense of urgency. It’s all about recapturing this pool of energy before it is lost to the landfill," Greg Wittbecker, Alcoa’s director of corporate metal recycling strategy, said in a call-for-action presentation to aluminum industry leaders during Platt’s Aluminum Symposium, Jan. 20-22 in Marco Island, Fla.

In the U.S. aluminum beverage can market of more than 1.5 million metric tons per year, about 800,000 tons of UBCs are currently being recycled. Wittbecker said that the U.S. recycling rate has fallen steadily from its high of 68 percent in 1992. In comparison, Brazil and Japan report phenomenal recycling rates of nearly 95 percent and 92 percent, respectively, and the global average is 60 percent.

Wittbecker cited several reasons why recycling had fallen in North America, including inconvenient collection systems, technology stagnation in coated scrap processing and commercial objectives that have not been aligned with recycling.

If 75 percent of UBCs not currently recycled in North America were brought back into the system, it would equate to approximately 600,000 metric tons of aluminum, Wittbecker explained. That 600,000 metric tons is equal to a savings of 1,286 megawatts of electricity, or the equivalent of two average sized coal-fired power plants running at maximum efficiency around the clock. "Aluminum recycling is part of the clean-air solution. By recycling 75 percent of UBCs not captured today, we achieve an environmental savings of reducing 11.8 million metric tons of carbon dioxide emissions a year," he said.

In January, Alcoa began a $22 million investment to expand recycling capacity at its Tennessee operations by nearly 50 percent, which Alcoa claims furthers its position as a leader in aluminum scrap processing technology. The expansion will use state-of-the-art environmental and fuel-efficiency technologies and provide flexibility to process other types of aluminum scrap.

Wittbecker outlined a number of possible approaches to help increase the recycling rate, including behavior changes, making recycling and collection more convenient, technical improvements for processing coated materials and enhanced commercial alliances across all in the industry.

AA Midwest Breaks Ground in Chicago Area

AA Midwest, a division of AAEQ Manufacturers and Recyclers, has broken ground on an 80,000-square-foot facility in Blue Island, Ill.

More than 50,000 square feet of the space will be used to grow the company’s automotive recycling business.

Currently, AA Midwest processes 40 vehicles per week, primarily for export.

AAEQ, with locations in Chicago and Las Vegas, has been in business since 1949 and operates a full-service scrap metal recycling (ferrous and nonferrous) business at its Las Vegas headquarters.

Metal Management Sees Profit Decline

Metal Management, Chicago, has reported consolidated net sales of $582 million in the third quarter of fiscal year 2008 and net income of $6.1 million, an 11 percent increase from figures for the third quarter of the previous year. However, income was down from the previous year’s fourth quarter total of $15.6 million.

"Revenues increased year-over-year in the third quarter due to higher ferrous unit shipments and prices, but earnings were compressed by declines in material margins in our nonferrous and stainless product lines, high ocean freight and a tight supply of ships, higher depreciation and amortization expense due to recent acquisitions and investment in plant and equipment and certain one-time charges," Daniel Dienst, chairman and CEO of Metal Management, says. "A tight supply of ships resulted in the delay of five export cargos, which will be reflected in our fourth fiscal quarter. We are currently seeing a return to more historical spreads, moderating export freight rates and increasing selling prices for ferrous scrap metal—all positive factors that, if sustained, may contribute to strong performance for Metal Management in future quarters."

The company reports that it sold or brokered more than 1.4 million tons of metal, including ferrous yard shipments of about 1.3 million tons and nonferrous shipments of about 117 million pounds.

The company turned ferrous inventories approximately 11 times and nonferrous inventories (excluding stainless and alloy) approximately 10 times.

SDI Reports Record Sales for Quarter, Year

Steel Dynamics Inc. (SDI) has announced record sales of $4.4 billion, compared to the previous year’s sales of $3.2 billion. Further, the company’s consolidated shipments increased by 32 percent to 6.2 million tons of product, which includes both finished steel and scrap metal.

The company reports net income of $395 million, which is essentially the same as the previous year’s income level.

For the fourth quarter, SDI’s net income was $98 million, a decline of $7 million from the $105 million reported for the corresponding period in 2006. However, net sales for the quarter were $1.5 billion, 73 percent higher than the fourth quarter of 2006 and 25 percent higher than the third quarter of 2007. The primary driver for the quarter’s increase in net sales was the acquisition of OmniSource Corp. of Fort Wayne, Ind., late last year.

"Our 2007 results are indicative of our success as it relates to diversification and growth strategies," Keith Busse, SDI chairman and CEO, says. "In a year when flat-rolled steel, the largest market segment in the U.S. steel industry, struggled, we experienced record consolidated results. Our strategy to diversify from the flat-roll steel business that we started in the mid-1990s into a multi-product steel producer has resulted in five steelmaking operations, plus related steel processing, fabricating, scrap, and virgin-iron resource operations."

While SDI’s shipments of flat-rolled sheet declined 2 percent in 2007, the company’s structural steel volume increased 15 percent, and shipments of engineered bars increased 9 percent. Busse says this resulted in a 4 percent year-over-year increase in steel shipments from the three Indiana mills SDI owned and operated throughout 2006 and 2007. "Total steel shipments, including acquired steelmaking operations, grew to 5.6 million tons in 2007, a 17 percent increase over 2006," he adds.

The company reports that ferrous resources have experienced dramatic price increases in the past few months and could remain strong. "Significant steel price increases have recently been announced in the industry, yet we expect that the higher steel selling values will be somewhat offset by the increased costs of steel scrap and other inputs," Busse says. "We also expect increased demand for and higher pricing of ferrous scrap to have a positive effect on consolidated earnings in the first quarter."

SDI’s steel operations accounted for 65 percent of the company’s fourth quarter sales. Fourth quarter shipments were 1.5 million tons on net sales of $1 billion. The average scrap cost per net ton charged increased $9 compared to the third quarter, but was $47 higher than the fourth quarter of 2006.

For scrap and scrap substitute operations, OmniSource became the principal reporting entity in this segment. The segment’s net sales for fourth quarter 2007 were $451 million, representing 28 percent of SDI’s fourth quarter net sales. Total ferrous scrap shipments during the quarter were 831,000 tons, while nonferrous scrap shipments amounted to 98.2 million pounds. During the fourth quarter, SDI’s scrap operations supplied 239,000 tons of ferrous scrap to its steel operations, about 22 percent of the tonnage of ferrous scrap purchased by its mills.

IMO Expects to Adopt Ship Recycling Regulations by 2009

The International Maritime Organization (IMO) has said it expects to adopt new globally applicable ship recycling regulations for international shipping and recycling facilities by next year, according to Thomson Financial.

Speaking at The India Maritime Summit 2008 in Mumbai, IMO Secretary General Efthimios Mitropoulos said the new law, titled "The International Convention for the Safe and Environmentally Sound Recycling of Ships," would include regulations for the design, construction, operation and preparation of ships to facilitate safe and environmentally sound recycling, without compromising safety or operational efficiency.

The regulations would also establish an enforcement mechanism for ship recycling, including certification and reporting requirements, Mitropoulos said.

He added that the recycling of ships was largely an unregulated industry in many parts of the world and the countries that insist on higher standards could lose out commercially.

"India’s own ship repair facilities have seemingly fallen victim to such a trend, as attempts to introduce higher health, safety and environmental standards resulted in a downturn at some of the leading facilities and migration of business elsewhere," the IMO secretary general said.

India’s apex court also recently decreed rules similar to the IMO convention, which suggests India would ratify the new treaty, Mitropoulos said.

Auto Shredder Nears Completion

The construction of an auto shredder for the newly formed Springfield Iron & Metal LLC, Springfield, Mo., is nearing completion. When the installation is complete, the company, owned by Greg Westfall and two silent partners, says it hopes to capitalize on its strategic location to process as much as 100,000 tons of ferrous scrap per year.

When fully operational, Westfall says the auto shredder will run four to five days per week.

While this is the first operation for Springfield Iron & Metal LLC, Westfall is no stranger to the scrap metal business, having previously worked for David J. Joseph Co. and Morris Brothers.

In preparation for the auto shredder’s installation, the company excavated approximately 35,000 cubic yards for the shredder’s concrete pad. A majority of the structures on the site, formerly owned by Southwest Regional Stockyards, were leveled.

Along with the 4,000-horsepower American Pulverizer 81/104 auto shredder, the facility is equipped with a Sennebogen 840 material handler, a Fuchs 350 material handler, a conveyor from Hustler Conveyor and a number of rolls-off and dump trailers. According to local press reports, the company will eventually invest approximately $6 million in processing equipment for the site.

The location has direct access to the Burlington Northern railroad and is proximal to two highways, enabling the yard to ship its processed ferrous material to many of the steel mills in the South, including Nucor and SeverCorr.

The majority of the material handled at Springfield Iron & Metal will be ferrous scrap, though the company expects to perform some nonferrous processing before the end of the first quarter.

Umicore Acquires Imperial Smelting & Refining

Umicore, headquartered in Brussels, Belgium, has reached an agreement to acquire Imperial Smelting & Refining Co. of Canada Ltd.

Imperial, based in Toronto, supplies precious metal products and recycling services for the jewelry industry in Canada and the United States.

Imperial will continue to use its name and will be integrated in Umicore’s Jewellery and Electroplating business unit, which is headquartered in Europe. The company’s Jewellery and Electroplating division has operations in Germany, the Netherlands and Austria. It is also active in Asia, operating a plant in Thailand.

Tube City, International Mill Service Inc. Merge Operations

Tube City IMS Corp., Glassport, Pa., has announced that its operating subsidiaries Tube City LLC and International Mill Service Inc. have merged. The newly merged company will be called Tube City IMS LLC.

Tube City IMS LLC will continue to operate under the trade names Tube City Division, Tube City IMS and IMS Division, Tube City IMS. Previous to the merger, the two subsidiaries had operated as separate wholly owned subsidiaries of Tube City IMS Corp.

In addition, the Canadian subsidiary of Tube City IMS LLC has been renamed from International Mill Service Ltd. to Tube City IMS Canada Ltd.

Metalico Closes on American CatCon Purchases

Metalico Inc., Cranford, N.J., has completed its previously announced purchases of substantially all of the operating assets of two affiliated catalytic converter recyclers in Texas and Mississippi.

The acquired businesses recover platinum group metals from scrap ceramic and metallic substrate automotive catalytic converters. The sellers are American CatCon Holdings LLC, having a principal location in Buda, Texas, and a buying center in Dallas, and American CatCon LLC, based in Gulfport, Miss.

The purchases were made by Metalico CatCon Inc., a wholly owned subsidiary. The buyer is retaining the sellers’ management and operational employees.

More information about Metalico is available at www.metalico.com.

CMC Receives National Account for ICS

The CMC Recycling division of Commercial Metals Co., Irving, Texas, has entered into an agreement with Industrial Container Services (ICS) to oversee the handling and sale of scrap metals generated at all of ICS’s manufacturing plants.

Headquartered in Montebello, Calif., ICS is a leading producer of steel drums and other reusable containers to a range of industries, including the food, paint and chemical sectors. ICS also retrieves and reconditions steel drums.

"I was skeptical at first about what CMC could do for us because I believed we were handling our scrap metal competitively," Calvin Lee, president and CEO of ICS, says. "However, CMC reviewed our scrap business and proved to us that they could create value for our organization without adding any additional cost."

ICS is privately owned by Wingate Partners, a Dallas-based private equity group.

Larry Olschwanger, a vice president with CMC Recycling, says, "We are pleased to have forged this relationship with ICS and look forward to working together to maximize the disposition of the scrap metals generated from their manufacturing process."

CMC Recycling’s National Accounts Group currently provides scrap management services to more than 350 manufacturing plants in North America and Europe.

Commercial Metals and its subsidiaries manufacture, recycle and market steel and metal products as well as related materials and services through a network of metal recycling facilities, steel mini-mills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill and marketing and distribution offices.