Cleaning up for competition

When considering zorba’s future, look to the recent past. Specifically, reviewing activities by recycling operators and businesses as of late helps to show where the nonferrous, mixed-shredded-metal grade is heading. Additionally, China’s changing regulatory attitude toward imported scrap materials has caused confusion and disruption.

From investing in new equipment to acquiring former competitors, recycling companies have made moves to improve their operations in the last year. Much of this activity has been spurred by tightening quality requirements coming out of China.

As a result, recyclers are further separating metals, clearing a path for additional “cleaning” of zorba, Robert Broughton, scrap market manager for Steinert US, Walton, Kentucky, says. This has opened the door to investing in technologies to further refine the mixed-metal grade.

“It is now clear that additional cleaning will be required of this commodity to allow it to be exported to China,” Broughton says of zorba.

Confusion in China

In addition to creating higher-value materials, others say these Chinese import restrictions will help to grow the U.S. domestic market for zorba. China has made clear the approval of scrap import licenses in that country in 2018 will be stricter, with fewer being issued.

Bob Brewer, speaking on behalf of Scrap Metal Services (SMS), Burnham, Illinois, agrees it will be necessary to create higher-value products for domestic consumption.

Brewer, executive vice president of SMS, says, “With increasing export quality demands, it will be beneficial for recycling companies to produce more direct consumable grades of aluminums to increase profitability and have less reliance on exports.”

In an alert to its members dated Nov. 16, 2017, the Institute of Scrap Recycling Industries (ISRI), Washington, says the Chinese government had notified the World Trade Organization of its intent to adopt new standards for the allowable contaminants thresholds for scrap imports by March 1, 2018. The new thresholds are set at a maximum of 1 percent for Category 6 nonferrous scrap and 0.5 percent for Category 7 mixed-metal scrap.

Bill Close, applications engineer at Wendt Corp., Buffalo, New York, says the industry is exploring options for more domestic consumption of zorba. While sources say China certainly is the largest consumer of zorba, domestically, specialty separation plants and secondary aluminum smelters predominantly buy the grade.

Close says, “We have a changing market in that previously zorba had been exclusively exported by a number of our customers, and now, as that market is tightening with quality requirements, the industry is exploring opportunities for keeping materials domestic and raising margins by creating higher-value products.” (Read “Wendt’s ways” to learn more about the company’s recent investment in its technology center designed to help its customers improve sorting of zorba and zurik.)

Purchasing power

To create products that are worth more, recyclers say—and have shown through their buying power—investing in downstream recovery equipment is necessary. And they have reason to: Sources say zorba demand will continue in balance for 2018.

The same goes for China’s demand for higher-quality zorba: Because of its red metal content, Brewer says exports to East Asia will continue in 2018’s first quarter.

As for domestic zorba supply in the U.S., Brewer says it is high, and the company doesn’t see that changing much in the first quarter of 2018.

“The need to source rich feedstock as well as operate an efficient separation system is paramount to stay competitive,” Brewer says.

One way SMS has stayed competitive is by using ultra-high-frequency eddy current separators in processing its shredded metals. Brewer says the investment in this technology has allowed the company to extract even more saleable materials from its shredded scrap streams.

Another company that will see an increase in zorba production is SA Recycling, Orange, California. In early November 2017, SA Recycling announced its purchase of Decatur, Alabama-based Tennessee Valley Recycling (TVR), a 110-year-old metal recycling company with five facilities in Alabama and one in Tennessee that include two auto shredders.

Bruce Keizler, vice president of nonferrous for SA Recycling, says this move absolutely will increase SA’s zorba production.

In a sign of further investments, Tom Knippel of SA Recycling told the Decatur Daily in a follow-up article on the acquisition that the company expects to invest in technology to retain and grow SA’s new locations in Alabama and Tennessee.

Several other U.S. recycling companies purchased equipment in 2017 to better sort metals, including zorba. From sensor sorters, including X-ray technologies, to screens and magnetic separators, several technologies can help to get the job done.

Close says Wendt has sold between 10 and 15 MTB Cable Boxes in the year since it was introduced to the market. The MTB Cable Box is a compact wire chopping system. Designed to process up to 3 tons per hour of materials, the containerized system processes a range of “difficult-to-process materials,” the manufacturer says, including zorba. Wendt has sold the system to, among others, Sims Metal Management, with headquarters in New York and Sydney; Scrap Central, Omaha, Nebraska; and Gershow Recycling, Medford, New York, which planned to install and commission the Cable Box in the fourth quarter of 2017.

SA’s Keizler says, “Investing in further processing could potentially add value by producing furnace-ready material instead of a product that needs to be further processed in order to be furnace ready.”

He says shredder feedstock will remain tight in 2018. In addition, as the market for domestic twitch (aluminum recovered from shredded automobiles) gets oversaturated, Keizler says it must find a home in the export market, lowering zorba prices.

Determining destinations

Finding new markets for zorba will be a task in 2018, sources say.

“The biggest change in the near-term is the available markets in which you can sell zorba,” says Steinert’s Broughton. “The question is not if there will be a demand, but which markets can do the separation for the highest return.”

At the end of October 2017, Andy Wahl, president of Atlanta-based TAV Holdings Inc. and vice president of the Bureau of International Recycling (BIR) Non-Ferrous Metals Division, writes in the BIR World Mirror on Non-Ferrous Metals that the zorba market had been on a “crazy ride” as prices jumped. China had been more willing to pay a premium for higher-grade scrap items to limit the risk of container rejections because of its import ban.

In his December 2017 report, Wahl writes that nonferrous metals saw “some stagnation in pricing, with spreads widening on red metals and aluminum.”

He adds, “Twitch prices have improved since the previous report, but the imbalance of domestic twitch and export zorba prices is making any margin difficult to achieve.”

Looking to mid-March 2018, Wahl says bids and decisions would be expected by then regarding the bankruptcy filing of Real Alloy, a Beachwood, Ohio-based secondary aluminum producer. Real Industry Inc., owner of Real Alloy, filed for Chapter 11 debt restructuring and bankruptcy in November 2017, citing difficult credit and financing conditions for its U.S. operations.

Zorba is predominantly aluminum but may also contain copper, nickel, stainless steel, tin, zinc, lead and magnesium. – Institute of Scrap Recycling Industries’ Scrap Specifications Circular

“The plentiful supply of secondary aluminum scrap has also been thrown a curve ball by the recent bankruptcy filing of a major secondary aluminum consumer, pushing pricing down,” he writes.

In that same edition of the World Mirror, Shen Dong with OmniSource Corp., Fort Wayne, Indiana, supports the trend toward developing other markets, saying, “Many Chinese scrap processors believe that the new thresholds will dramatically reduce scrap imports into China in the near future; other regions will be developed for scrap processing.”

David Chiao, president of BIR’s Non-Ferrous Metals Division, writes in the December World Mirror that uncertainty surrounding China’s policy has “led many suppliers to develop their own processing of mixed metals.”

He continues, “Some Chinese importers are flooding in the direction of Category 6 items, while some consumers are beginning to focus on elsewhere other than China, with the top destination being Southeast Asian countries. Suppliers are also looking to other countries as alternatives to the Chinese market.”

Nevertheless, the future of zorba is bright. While darkness lies within the uncertainty surrounding China, investments in equipment and new markets will help to lighten the picture.

As Close says, “There’s always going to be an appetite for zorba. The metals market is still critical to our economy.”

The author is associate editor of Recycling Today and can be contacted via email at mworkman@gie.net.