As we wrap up production on the May issue of Recycling Today, more than 1 billion people around the world are celebrating the anniversary of what many consider the birth of the modern environmental movement, April 22, 1970, or Earth Day, according to the Earth Day Network (EDN). The nonprofit organization says it works with more than 22,000 partners in 192 countries to broaden, diversify and mobilize the environmental movement.
Recycling is an important component of the environmental movement, conserving raw materials and reducing energy used during product production.
EDN singled out Apple this Earth Day for strengthening its commitment to environmental sustainability, including making its new Apple Campus 2 more environmentally friendly by increasing its use of alternative power. Apple also has pledged to send less electronic scrap to landfills, EDN says.
Apple has revamped its environmental responsibility minisite, www.apple.com/environment, to detail its environmental initiatives. The company reminds visitors that its stores will take back Apple products for free, responsible recycling. Apple also says it has set up recycling programs in cities and on college campuses in 95 percent of the countries in which it sells products, diverting more than 420 million pounds of electronic equipment from landfills.
Since 2010, Apple says it has recovered for recycling 85 percent of the products it sold seven years earlier. “But,” the company continues, “our larger goal is to identify new recycling technologies that can help us recover additional materials and increase resource efficiency.”
While recyclers know the significant impact recycling has on the environment and the benefits of a circular economy, they are probably thankful that Earth Day helps to remind others of these benefits, spurring them to action.
Correction: In the article, “Canada Fibers adds Bollegraaf equipment at dual-stream MRF,” posted Jan. 10, 2014, to www.RecyclingToday.com/canada-fibers-van-dyk-bollegraaf-mrf.aspx, ownership of the Hamilton, Ontario, material recovery facility (MRF) in question was incorrectly attributed to Canada Fibers Ltd. (The article has since been corrected.) The MRF is owned by the city of Hamilton, which financed the sorting equipment for the original container line installed at the facility as well as the upgrade detailed in the article. Canada Fibers operates the MRF under contract with the city of Hamilton, which owns all of the recyclables processed there.
Recycling Today apologizes for the error and thanks Emil Prpic, manager of recycling and waste disposal for the Hamilton Public Works Department, for pointing out this mistake.
Designing products and packaging that can cause an individual to make a purchase remains the primary task of the creative people employed by consumer product companies and their design agencies.
When it comes to food and beverage products, the integrity and shelf life of the product within and the health of the buyer go hand in hand as foremost goals.
Despite the irreplaceability of these high priorities, corporate sustainability initiatives and striving to meet the recycling expectations of consumers and government agencies are causing many brand owners and packaging designers to think more about the end-of-life recyclability of what they put onto store shelves and into coolers.
On the list
The most common forms of packaging—such as old corrugated containers (OCC), aluminum used beverage containers (UBCs) or PET (polyethylene terephthalate) beverage bottles—are well-established globally to recyclers and traders.
Both challenges and opportunities arise in the recycling industry, however, because the world of consumer packaging is never standing still. Makers of food, beverages and other products are always seeking a competitive edge and often turn to innovative packaging designs and ideas to provide that edge.
Canada reports plastic progress
The Canadian Plastics Industry Association (CPIA), Mississauga, Ontario, has conducted research that it says points to increased plastic packaging recycling taking place in that nation.
The report, titled “2012 Post Consumer Plastics Recycling in Canada Report,” has been designed to provide detailed information on the favorable recycling trend.
Moore Recycling Associates Inc., Sonoma, Calif., the firm that researched and wrote the report for CPIA, says the recycling of postconsumer plastic packaging in Canada increased for the third straight year in 2012. An additional 10 percent of plastic packaging was recycled in 2012 compared with 2011. The increase is the result of more material collected for recycling as well as more companies providing recycling information, according to the report.
In total, more than 628 million pounds (314,000 tons) of postconsumer plastic packaging was collected for recycling in 2012 in Canada, the report notes.
“We are pleased to see an overall increase in companies participating in this valuable survey and in the amount of plastic packaging collected and recycled in Canada,” says Carol Hochu, president and CEO of the CPIA. “The survey results found that [314,000 tons] was recycled, 83 percent of which remained in North America.
“We continue to work with our members to build and grow our national recycling industry in Canada,” Hochu continues, “reusing valuable plastic materials and creating jobs."
The 2012 results show an increase of 3 percent in the recycling of plastic bottles between 2011 and 2012, a 29 percent increase for nonbottle rigid plastics, an increase of 18 percent for plastic bags and outer wrap and a 24 percent increase for polystyrene foam.
The report says compounders and consumers of plastic scrap in Canada are eager for more supply and have under-utilized capacity, which creates ample opportunity for consumers and businesses to supply recyclers with more scrap. The report estimates the film and bag recycling capacity rate in Canada increased from 38 percent to 49 percent in 2012 and the nonbottle rigid recycling capacity rate went from 47 percent to 60 percent.
The report is available from CPIA and can be accessed by visiting http://bit.ly/1mdSax5.
For a creative person in the design field, this is a welcome process. For recyclers, however, this can be a far less exciting prospect, as a new design may introduce a new material or a combination of materials that is difficult to separate.
Whether the changes are welcome or not, recyclers must stay attuned to new types of packaging. Traditionally, recyclers have found themselves well outside the decision-making process of brand owners and designers as they created new types of packaging.
Corporate sustainability and product stewardship trends, among other factors, have begun to change that situation. Ronald deVlam of design firm WebbdeVlam, which has offices in Chicago and London, says consumer product companies are increasingly focusing on “doing well and doing good” as they try to build sustainability and environmental stewardship track records they can point to with pride.
Speaking to attendees of the 2014 Paper & Plastics Recycling Conference Middle East, held in Dubai, United Arab Emirates, in March, deVlam said lightweighting (to save on transportation energy consumption) and closing the loop are among the priorities for companies making packaging design decisions.
Makers of detergents and cleaners increasingly sell products in a concentrated form that cuts down on the amount of overall packaging used.
In terms of consumer products companies closing the loop, Coca-Cola Co., Atlanta, received the 2010 Design for Recycling Award from the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, D.C, for its use of the PlantBottle—a biopolymer that is compatible with PET for recycling purposes.
Upon winning the award, Coca-Cola said it had been working to develop the compatible container for more than a decade. “For the past 10 years, we’ve been working to discover a way to completely decouple the plastic used in our bottles from oil without compromising the advances made in efficiency, recycling and product production,” stated Scott Vitters, who at the time was head of global sustainable packaging for Coca-Cola Co. “Instead of focusing on developing an entirely new renewable resin, we decided to leverage the existing value of PET plastic and make it even better,” he added.
Another company that has been putting considerable energy and investment into packaging recyclability is Sweden-based Tetra Pak, which creates multimaterial juice and beverage cartons designed to extend the shelf life of such products.
At times during its more than 60-year history, Tetra Pak has been criticized by recycling advocates for its package design (known as aseptic packaging), which consists of layered paperboard, aluminum and polymer laminates.
By weight, the average aseptic carton is 73 percent paper, 23 percent plastic and 4 percent aluminum, said Tetra Pak’s Otso Toikka, who also offered a presentation at the 2014 Paper & Plastics Recycling Conference Middle East.
Toikka said the use of the three materials is intrinsic to the design of the company’s package, so major design changes are unlikely. However, that hasn’t stopped Tetra Pak from paying greater attention to recyclability.
In the U.S., Tetra Pak has been a key backer of the Vernon Hills, Ill.-based Carton Council, www.recyclecartons.com. The industry-funded organization has focused on increasing collection of aseptic cartons and other juice and beverage cartons. It also has funded equipment to help recyclers sort out cartons from commingled streams and has worked with paper mills to encourage the pulping of cartons at mills.
(More information about the Carton Council’s efforts can be found in the article “An expanding frontier” in the December 2012 edition of Recycling Today. An article titled “The ABCs of recycling” in the March 2014 edition of Recycling Today provides an update on the Carton Council’s collection efforts in schools.)
In his presentation, Toikka emphasized that Tetra Pak’s product is designed to prevent waste of another kind—food and beverage spoilage. According to Toikka, a United Nations study estimates that some 1 billion tons of food is spoiled or otherwise wasted each year, with the problem being especially acute when packaging is lacking.
While food and beverage waste prevention is Tetra Pak’s primary mission, the company understands the need to prioritize recycling, Toikka said. “Recycling is no longer optional, it is essential and is the most sensible thing to do.”
The efforts of the Carton Council in the U.S. and similar programs in other parts of the world have made a difference in terms of aseptic packaging, Toikka said.
Tetra Pak’s figures indicate that globally some 343,000 metric tons of Tetra Pak cartons were recycled in 2007, but that amount has climbed steadily in each of the subsequent six years. By 2012, the figure had reached 581,000 metric tons, and in 2013 it climbed to 623,000—a 7 percent year-on-year increase.
The 2013 totals reflected a 24.5 percent global recycling rate for aseptic cartons, with some 43 billion cartons being recycled.
Paper mills can effectively turn nearly 75 percent of the collected weight back into a new product, with tissue mills often being a common destination for cartons. It is unclear in this case to what extent, if any, the plastic or aluminum can be recovered by mills for recycling purposes.
“Technology is no longer a limitation,” said Toikka regarding the ability for these two materials to be recovered, though the cost effectiveness for a mill to do so remains an issue.
In some parts of the world, including the Middle East, the first step of carton collection has yet to be addressed, Toikka acknowledged. “Sorting and collection requires cooperative effort,” he said, with Tetra Pak being on the lookout for allies.
The opportunity for increased postconsumer packaging collection was a recurring theme at the 2014 Paper & Plastics Recycling Conference Middle East.
Sana’a Al-Ghemlas of Kuwait Packing Materials Manufacturing Co. said her PET bottle recycling firm is constantly seeking more feedstock for its recycling line.
Al-Ghemlas said prorecycling government policies and recycling habits are lacking in many parts of the Middle East. In the region, the No. 1 recycling code stamped on water and soft drink bottles to many people “means you can use it only once,” she quipped.
Kuwait is about the size of New Jersey but only about 8 percent of the land is occupied, said Al-Ghemlas. Nonetheless, the nation is home to 16 landfills and it spends some $85 million per year on solid waste disposal. She estimated that some 10,000 tons per year of PET bottles are “thrown away” in Kuwait, despite the existence of her company’s PET recycling operation.
Although Al-Ghemlas expressed doubt concerning the Kuwait government’s lack of attention to recycling collection, Stuart Fleming, founding partner and CEO of Dubai-based Enviroserve, said working with the government of Dubai to help draft recycling-friendly legislation has been a good experience for his company.
Fleming said he helped draft a mobile phone recycling law that has subsequently been adopted in Dubai. Fleming pointed to this as an outcome that was preferable to complaining.
When a product or package has a low recycling rate, “We can blame others or the government,” said Fleming, but ultimately individuals are responsible for making purchasing decisions or taking actions that can increase recycling rates.
Fleming said one of Enviroserve’s latest initiatives, being conducted in cooperation with the Dubai Municipality government, is “The Green Truck,” a collection truck for household recyclables, such as paper, plastic bottles and aluminum beverage cans as well as obsolete electronics.
Fleming said the truck is seeking customers in targeted residential areas. “We’ve got 150 households signed up, and we get a couple of calls per day.” He called it part of an effort “to create a recycling system at homes and offices. I’m excited. I’m investing in it.”
Considering the global trends toward sustainability and product stewardship, recyclers in the Middle East region may have good reason to invest in the growth of postconsumer packaging recycling.
The author is editor of Recycling Today and can be contacted at firstname.lastname@example.org.
As Americans watch for signs of an improving economy, many eyes are on the construction industry. When the housing market crashed and construction employment tumbled in 2008, many ancillary businesses to the construction industry were affected. The demolition industry was especially hard hit, as much of the work awarded to demolition contractors happens in advance of new construction projects. And less construction and demolition activity means less volume for recyclers.
As the demolition industry gears up for its busy season, the aftereffects of the last few years have set up an interesting scenario: more demolition projects to bid on and fewer companies to bid on them.
The Los Angeles-based research firm IBISWorld released a report in November 2013 titled “Demolition and Wrecking in the U.S.” in which it surmises, “The demolition and wrecking industry has been shaken by tumbling downstream construction and land-development markets during the past five years.” The report adds, “A shrinking pool of contracts to bid for during the past five years has led to intense price competition in which operators underbid one another for projects. As a result, the industry’s average profit margin fell significantly during the recession. And, because smaller contractors are typically unable to sustain lower returns from projects, many exited the industry altogether, having been forced out by intense price competition.”
Michael Taylor, executive director of the National Demolition Association (NDA), Doylestown, Pa., says the association lost about 200 members during the height of the recession, which he estimates began for the industry in 2009. He points out that most of the companies that did not survive the recession were “the small guys.” Taylor says many of these companies started up amidst the overheated scrap metals market in China in the mid-2000s. Taylor adds that no major demolition firms or large regional firms went out of business.
Signals are beginning to point to an improvement in the construction sector. Signs that the construction industry is making a comeback in the U.S. began showing up in late 2013. In October, construction employment hit a four-year high. Then in November 2013, a 17 percent increase in construction spending was reported.
As 2014 rolled in, numbers were still looking promising, and demolition and recycling firms like Houston-based Cherry Cos. are poised to capitalize them.
“The market is booming, not only from the demolition but also from the recycling side,” says Leonard Cherry, president of Cherry Cos. “The entire construction industry in Texas is robust. We are very fortunate to currently be seeing double-digit increases in total volume since the first of the year.”
However, Cherry adds, “We are not seeing that same corresponding increase in margin, but we are seeing that increase in total volume, which is driven by increased opportunities.”
Rick Givan, manager of special projects for Denver-based demolition firm Fiore & Sons, says he is starting to see signs of improvement in residential homebuilding in Colorado. “All the projects that have been delayed and put on hold for years are now coming back,” he says.
Givan attributes the uptick in homebuilding activity to pent-up demand, population growth and competitive bank rates. As residential construction picks up, he says, hospitals and shopping centers will be coming down to make way for new commercial development.
A closer look
The construction industry consulting firm FMI, based in Raleigh, N.C., recently released its “Q1-2014 Construction Outlook.” The forecast continues to show optimistic growth in several segments, which should suggest an increase in demolition activity as a result. According to the report, construction put in place is predicted to increase 8 percent in 2014, with continued growth over the next few years.
Select market predictions include:
In Cherry’s opinion, the Texas market must be faring better than other areas of the U.S. because of more out-of-state competition. “When the market’s hot, some guys just move into that market,” he observes.
Ron Feather, president of Demolition Services Inc., Manassas, Va., also says he is feeling an increase in competition in the Washington, D.C., area where he bids for jobs. “The competition in this area is tough,” he says. “There are a lot of great demo guys in this area. They all have their pencils sharpened, and we are all being very competitive.”
The harsher than normal winter may have delayed some projects in the Mid-Atlantic, but just 95 miles south in Richmond, Va., it hasn’t affected the number of projects S.B. Cox Inc. has in its future. Owner S. Barbee Cox III says that most demolition contractors are lucky if they know what they will be working on two months from now, but this year, “We are pretty locked up right now through July, and we have several jobs that will go into the fall.”
The Upper Midwest also is showing signs of recovery in the commercial construction sector, according to Don Rachel, CEO, Rachel Contracting, St. Michael, Minn., but it is still a bit early to know for sure. As of early April, Rachel says, “We’ve still got piles of snow on the ground.”
Rachel Contracting won’t reach its peak season until July or August, but the company is finding work. It is in the midst of a few projects, including demolishing three large dormitories at the University of Minnesota Duluth.
Material generation from demolition sites in other parts of the Midwest began increasing as early as March.
“We are really busy,” says Andrea Yedinak, a material trader for All American Recycling, a scrap metal processor with yards in Joliet and Ford Heights, Ill. “It is a really good turnaround from the deep freeze we’ve had here. We’ve had some large jobs where all of our drivers and all of our trucks have been dedicated to just demolition,” Yedinak adds.
Demolition contractors across the country are having little trouble finding work. “I’ve got more backlog than I usually do,” observes Cox.
Through the recession, university and hospital projects in the Richmond area were steady. Now commercial and military projects are coming back. Demand for concrete and roll-off containers also is up for S.B. Cox. “Things are better than they’ve been for five years here,” Cox says.
Feeling the Pinch
While business is picking up for many demolition contractors, metals prices are taking away from profits.
“We’ve seen a downturn within the last 50 days,” Cherry says. “We are anticipating the market will begin rebounding in the near term.”
Cox is hanging on to material in anticipation of the market going back up. “We are cutting structural steel up and holding it right now,” he says.
Rachel says copper prices have taken a hit in Minnesota as of late and the recycled aggregates market has not been that active either. “We have an overabundance of [aggregate] in the Minneapolis/St. Paul market at this point just because there has been a fair amount generated over the past few years and not a lot of construction activity to absorb it. It is a very long commodity.”
By contrast, aggregate markets in the Mid-Atlantic and Texas are active. Cox says, “Base is hard to move, but we can move all of the 3-inch material we can make.”
In Texas, Cherry says aggregate sales are setting records. “Most of our aggregate sales are centrally located within the greater Houston area,” he says. “With the robust economy, aggregate sales are currently running at an all-time high. That is currently our strongest market despite the uptick on the demolition side. The aggregate side is actually even stronger.”
Despite reports of growing momentum, demolition activity has not returned to prerecession levels. According to IBISWorld, that won’t happen until 2018, but the industry is well on its way back. The survey forecasts 6 percent growth in 2013, noting, “Emphasis on value-added services like concrete cutting and secondary revenue streams like selling recycled material will increasingly define contractors’ business models in the coming years.”
The author is a managing editor for the Recycling Today Media Group and can be reached at email@example.com.
Ferrous scrap recyclers have been coping with subpar industry conditions consistently since the subprime mortgage crisis triggered the recession beginning in the second half of 2008.
The shriveled construction sector and other scrap supply-related problems most often are cited as problems by ferrous scrap recyclers, along with the competitive atmosphere created by the increased shredding capacity brought online from 2002 to 2008.
Within the past year, ferrous scrap processors and shippers that are set up to serve the export market have one additional problem with which to cope: a troubling reduction in demand and orders placed from overseas buyers.
The combination of tight supply and lackluster overseas demand has made the ferrous scrap market especially troublesome for recyclers on the Atlantic and Pacific coasts and has produced a ripple effect, making life a little more difficult for scrap recyclers throughout North America.
Los Angeles scrap recycler Doug Kramer of Kramer Metals Inc., who also serves as the current chairman of the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, D.C., titled a March 2014 presentation he gave in Dubai, United Arab Emirates, “Demand for Ferrous Scrap and Prospects for 2014: A West Coast Perspective.”
Speaking to attendees of the 2014 Middle East Metals Recycling Conference, organized by the Recycling Today Media Group and Media Fusion, Kramer portrayed his home state of California as one that is coping with the same challenges facing scrap recyclers throughout the U.S. as well as dealing with problems unique to the Golden State.
Among the industry conditions affecting Pacific Coast recyclers has been a steady decline in ferrous scrap demand from overseas buyers during the past 30 months or so.
The U.S. shipped 22.7 million metric tons of ferrous scrap overseas in 2011, helping boost ferrous scrap prices and bolstering an industry that was in many other ways still recovering from the financial industry meltdown of 2008.
That demand dropped to just 20 million metric tons in 2012, however, and fell another 14 percent to 18.6 million metric tons in 2013. Because per-ton pricing also dropped in 2013, ferrous scrap export revenue declined by an estimated 20 percent in 2013 compared with 2012.
The decline, Kramer said, was a departure from the pattern that reigned from 2000 to 2011, when the volume of U.S. scrap exports grew by a multiple of five, according to the ISRI chairman.
In 2013 the weaker demand affected not just Pacific Coast exporters but also those on the Atlantic and Gulf coasts, as nations buying less U.S. ferrous scrap included Turkey (down 18 percent) and India (down 60 percent).
Shippers in California also were affected by reductions in buying from Taiwan (down 15 percent) and South Korea (down 11 percent). While China’s demand was relatively stable (down 1 percent), it has not been among the three largest ferrous scrap buyers since 2009, when its steel mills came into a down market to buy 13.7 million metric tons of scrap from North America and other parts of the world. In subsequent years, it has purchased less than half this amount, including less than 5 million metric tons in 2012 and 2013.
The dwindling of the export market is evident in pricing tracked by American Metal Market (AMM). Throughout late 2013 and so far in 2014, AMM’s West Coast and East Coast Ferrous Scrap Index prices have traded at a much lower range compared with its Midwest scrap price index figures.
In the early March 2014 buying period, while recyclers were able to receive from $373 to $391 per ton from Midwest mills (depending on the grade), AMM’s West Coast export index price stood at just $330 per ton, while the East Coast index price was down to $322 per ton. As well, AMM said it was at times having difficulty updating its export index prices because of a lack of transaction activity.
With steel output in the United States having been stable in the 75 percent mill capacity range, the drop in ferrous scrap export orders eventually brought prices down for all sellers. While the No. 2 shredded scrap grade as tracked by the Raw Material Data Aggregation Service (RMDAS) of MSA Inc., Pittsburgh, started the year trading at $436 per ton in January 2014, it dropped to $405 per ton in February and declined further to $388 in March 2014.
Recyclers on the western and eastern seaboards might have borne the brunt of the initial impact of lagging export orders, but it was not long before recyclers in the rest of the country shared in the misery.
And another thing
The reduction in export shipping represents a newer challenge on the sell side for the scrap iron and steel sector, while a competitive fight for tight supply remains the reality on the buy side.
In his “West Coast Perspective” presentation, Kramer said this struggle to find sufficient ferrous scrap feedstock to match processing capacity is especially noticeable in his home state of California.
Despite its reputation as a state with a regulatory framework that can be hostile to the manufacturing sector, California experienced manufacturing output growth of between $10 billion and $15 billion in 2007 and 2008.
That pattern was thrown into a sharp reversal in 2009 and 2010 when output declined by $10 billion to $15 billion in the Golden State, Kramer said, citing data from the Bureau of Economic Analysis of the United States Department of Commerce.
After manufacturing output in California fell by another $5 billion in 2012, the sector finally rebounded with a $15 billion gain in output in 2013. However, total 2013 manufacturing output in the state, at $205 billion, remains below the $219 billion level it was at in 2008.
Kramer showed U.S. Bureau of Economic Analysis figures from other regions of the country for the same time frame that reflected similar patterns. These numbers were one reason why he said he “still sees significant recession in the Western U.S.” and that he found himself asking, “Are we really in recovery?”
The slow-motion manufacturing rebound, which affects supplies of prompt ferrous scrap grades, such as No. 1 busheling, has been matched by an equally slow moving rebound in the construction sector.
Since construction and demolition activity is a major generator of ferrous scrap that goes into the plate and structural (P&S) and No. 1 heavy melting steel (HMS) grades, it also has created what Kramer called “heightened competition for available feedstock” in these grades.
Ferrous scrap processors and exporters are likely aware that Turkey has been holding the position as the world’s leading destination for internationally traded ferrous scrap for several years.
Within the United States, a steel- and scrap-related crown has been held for a longer time by the state of Indiana. According to a report in the Northwest Indiana Times, Munster, Ind., American Iron and Steel Institute (AISI), Washington, D.C., figures show the Hoosier state has been the leader in steel production in the U.S. every year since 1980.
Rachel Gilbert of the AISI indicated to the regional newspaper that northwest Indiana has weathered the changes and consolidation in the domestic steel industry in part because its Great Lakes ports make it a cost-effective location to receive iron ore and other raw materials required by integrated steelmakers.
The state also is located in the ferrous-scrap-rich Midwest, helping to make Indiana popular with electric arc furnace (EAF) steelmakers, such as Nucor Corp. and Steel Dynamics Inc.
Although AISI does not disclose state-by-state production figures, the association’s Great Lakes region, which includes Indiana, churned out 34 million of the 94.7 million tons of steel produced in the U.S. in 2013, or nearly 36 percent of the national total.
Shredded scrap grades, the other most common type of ferrous scrap, have been affected not only by restrained economic activity on several fronts but also by a growth in processing capacity that was unfortunately timed in sync with these reduced scrap flows.
Scrap processors in many parts of the country have identified it as a competitive must to be able to produce shredded grades. Many have been heartened to find that equipment manufacturers have introduced increasingly affordable shredders that carry smaller upfront costs and potentially workable operating costs for small to medium-sized recycling companies.
Whether caused by increased demand for ferrous scrap from consumers or increased production by processors who have shredders at the ready, shredded grades have emerged as the ferrous scrap sector leader. According to the U.S. Geological Survey, Reston, Va., some 16 million metric tons of shredded ferrous scrap grades were produced in the U.S. in 2012 compared with less than 14 million tons of No. 1 and No. 2 HMS, about 7 million tons of P&S grades and less than 5 million tons of No. 1 busheling.
For a number of existing shredding plant operators, the competition has been unwelcome and has resulted in dwindling flows and margins. Although numerous new automobile shredders have come online in the U.S. in the past five years, many existing plants have greatly scaled back their operating hours and output or, in some cases, have been temporarily idled.
While shredded scrap is being produced in record numbers, few ferrous scrap processors claim they are seeing a compatible rise in operating margins or profits.
Recyclers looking for signs as to how the rest of 2014 may differ from the current situation likely would receive mixed signals, as has been typical of the global economy in the past five years.
In the U.S., the automobile and light truck sector has been one brighter spot in that time frame. Americans purchased some 15.6 million vehicles in 2013, allowing manufacturers to produce at a range closer to the prerecession figure and well above the abysmal 11.4 million vehicles sold in 2009.
In February 2014, Americans were buying vehicles at an annualized rate of 15.3 million units, signaling a slight downturn in this vital scrap generation market.
The road back to a healthy construction sector in the United States remains a long and winding one. The Associated General Contractors of America (AGC), based in Arlington, Va., measures the industry’s pulse in part by tracking construction employment levels, which were rising throughout much of 2013 and in the first month of 2014.
Between January 2013 and January 2014, construction employment expanded in 195 metro areas, was level in 54 regions and declined in 90 metro areas, according to an analysis of federal employment data that was conducted by the AGC.
“It is a sign of the continued strengthening of the construction industry that nearly 60 percent of metros added construction jobs from a year earlier despite the severe winter conditions in much of the country this January,” says Ken Simonson, the association’s chief economist. “Nevertheless, the industry’s recovery has a long way to go with only a smattering of metro areas exceeding their previous peak January levels of employment.”
Perhaps providing some hope in Kramer’s operating region, the Los Angeles-Long Beach-Glendale, Calif., metro area added the largest number of construction jobs, with a 7 percent rise in employment creating 8,100 construction jobs.
Another 7,800 construction jobs were added in the adjacent Santa Ana-Anaheim-Irvine, Calif., region, while the building industry also ramped up in the Houston area (adding 7,900 jobs), the Dallas area (adding 7,200 jobs) and Baton Rouge, La. (adding 4,500 jobs).
Construction cranes have been less common in other metro areas, with net building industry job losses experienced in metro areas such as Gary, Ind.; Norfolk, Va.; and Westchester, N.Y.
“The industry is slowly digging itself out of a construction employment hole that got pretty deep during the past few years,” says Stephen E. Sandherr, AGC CEO.
Ferrous scrap recyclers will be among those hoping that the pace of that digging will increase throughout 2014, ideally generating additional scrap as well as increasing the output figures at domestic steel mills.
The author is editor of Recycling Today and can be contacted at firstname.lastname@example.org.
Some steelmakers are putting capital and renewed effort into producing direct reduced iron (DRI) and other alternative iron units that compete with scrap as feedstock at electric arc furnace (EAF) steel mills.
Determining the potential role of DRI as a replacement for scrap spurred some lively debate at the Spotlight on Ferrous session at the Institute of Scrap Recycling Industries Inc. (ISRI) 2014 Convention & Exposition.
Steel industry veteran John Harris, CEO of Canada-based metals sector information service Aaristic Services Inc., said the DRI being produced in places like St. James Parish, La., by Nucor Corp., is intended to be “a replacement for busheling.”
Thomas Danjczek, past president of the Steel Manufacturers Association, Washington, D.C., said he is not convinced DRI is suitable for the role. “Whoever called [DRI] a scrap substitute should be shot,” stated Danjczek.
Recalling his prior career in the steel industry, Danjczek said DRI and similar iron units “took more energy and took longer” to melt at EAF mills. Their role, he said, was valuable when “metallurgically I needed the chemistry change.”
Rather than being a threat to ferrous scrap, Danjczek said investments in DRI production (which Harris deemed likely with America’s access to additional natural gas reserves) will help the EAF sector compete more strongly with integrated steelmakers.
“I don’t follow the busheling theory,” he stated. “DRI will cause more scrap to be used in the U.S. It will replace hot metal,” Danjczek said.
Harris was unconvinced, saying abundant DRI prompted by “cheap gas and cheap iron ore” would allow some EAF mills to use 100 percent DRI.
In the shorter term in the ferrous scrap market, early April saw a rebound in pricing as domestic mills experienced a slight uptick in production and export buyers also showed renewed exuberance for making purchases.
Data collected by American Metal Market (AMM) led the publication to boost its Ferrous Scrap Export Indices on both the East and West coasts in mid-April. The West Coast Index climbed more incrementally, by $12, while the East Coast Index benefitted from increased demand by soaring $42 from March to April.
Strong Turkish buying in late March and early April were cited as factors in the East Coast increase, as was stubbornly bad winter weather that held supply in check.
While established recycling companies continue to decry a fiercely competitive landscape that limits ferrous scrap flows, investments in processing equipment (including shredders) and the startup of new businesses continues.
In the Spotlight on Ferrous discussion, Rich Brady, executive vice president, Southeast, for Fort Wayne, Ind.-based OmniSource, credited “a bunch of great shredder salesmen out there” for ongoing installations of new auto shredders. “The number of installations has increased,” he remarked, adding, “Ultimately, you need to be a low-cost producer.”
Signs pointing toward increased competition continued to emerge at the ISRI 2014 Convention & Exposition, however. A recycler in the Upper Midwest disclosed that while he has traditionally relied on balers and shears to process his ferrous scrap, he is researching newer, smaller shredders as a processing option.
As well, a member of a family that once had a considerable scrap processing presence in the Southeast indicated that his family is taking the initial steps to re-enter the sector.
Regarding the role of steel mill companies as owners of ferrous scrap processing yards, Brady of OmniSource (which is owned by Indiana-based EAF steel producer Steel Dynamics Inc.) said, “It has been an interesting experiment [to] put it mildly.”
Recyclers who gathered at the ISRI Convention gave mixed reviews of the ferrous scrap supply picture heading into mid-April. Most were optimistic that better weather would improve flows, but many remained uncertain whether the construction or demolition sectors would rebound sufficiently in 2014 to prompt additional supply.
It is unclear whether domestic steel mills are preparing for a busier spring and summer construction schedule, judging by weekly figures from the American Iron and Steel Institute (AISI), Washington, D.C.
Steel production in the U.S. during the week ending April 12, 2014, was 1.79 million tons, creating a capacity rate of 74.2 percent. The weekly figure is down by 2.8 percent from the 1.84 million tons produced in the comparable week in 2013. Production for the most recent week, however, was up 1.3 percent from the prior week.
Year to date, 26.63 million tons of steel have been produced in the U.S. at a mill capacity rate of 76.1 percent. That figure is down by 0.8 percent from the 26.85 million tons produced through April 12, 2013.
The American Metal Market (AMM) Midwest Ferrous Scrap Index is calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The AMM Scrap Index includes material that will be delivered within 30 days to the mill. Spot business included after the 10th of the month will not be included. The AMM Ferrous Scrap Export Indices are calculated based on transaction data received that are then tonnage-weighted and normalized to produce a final index value. The detailed methodology is available at www.amm.com/pricing/methodology. *FOB New York, in metric tons; **FOB Los Angeles, in metric tons.
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