RockTenn, the Norcross, Ga.-based recycler and producer of corrugated and consumer packaging, has earned the respect of its peers in its nearly 40 years of operation under that name. (The company was formed when Tennessee Paper Mills Inc. and Rock City Packaging Inc., owned by Arthur Morris, merged, and its lineage dates back to 1936.) Erik Deadwyler, senior vice president and general manager of RockTenn Recycling, the company’s recycling business segment, says RockTenn has attained this position by adhering to its philosophy of producing quality products as efficiently and cost effectively as possible. He adds that the company’s focus on innovation also helps to create a competitive advantage that has fueled RockTenn’s growth throughout the years.
RockTenn Recycling serves as the supply arm for RockTenn’s mills. “Every ton of paper that goes into a RockTenn recycled paper mill is managed through the recycling business,” Deadwyler says. “In addition, not only are we charged with managing the logistics, the supply and the pricing, we also manage the quality for those mills as well as the inventory for those mills. It is a highly integrated model, as we really work hard at it and are very much focused on it.”
The recycling division handles some 8 million tons of recyclable commodities per year, 250,000 of which are nonfiber items, Deadwyler says. Four million of those tons are comprised of OCC (old corrugated containers), ONP (old newspapers), DLK (double lined kraft), mixed paper and boxboard cuts consumed by RockTenn’s mills. RockTenn Recycling’s 29 recycling plants process 1.7 million tons of the total recyclables handled by the company. The balance of the material is bought and sold by RockTenn Recycling’s brokerage operations, Deadwyler says.
Eight of RockTenn’s recycling plants are single-stream material recovery facilities (MRFs) that handle residential as well as commercial and industrial material, while the remaining 21 plants are paper stock processing plants equipped with balers and minimal sorting capabilities. “These are generally smaller plants that are focused on serving local niche markets,” Deadwyler adds.
Of the remaining 4 million tons of recyclables that RockTenn does not consume internally, he says, the company exports roughly 1 million tons, largely to China. Domestic consumers purchase the balance of the material.
RockTenn Recycling generates in excess of $1 billion in revenue per year, he says, with $100 million coming from the Waste Spend Management Group, which is part of the company’s national accounts team. This group, with clients that include J.C. Penney and Starbucks, helps customers manage their spending on recycling and trash disposal services, Deadwyler says.
Of the issues currently facing the recycling industry, Deadwyler says two are foremost in his mind: the changing scope and efficiency of single-stream MRFs as well as quality concerns related to digging deeper into the waste stream to extract more recyclables. The second issue has been compounded recently by China’s Operation Green Fence.
“One of the big challenges I see is that the industry is in this dilemma right now where we are trying to go out and source new volume from the waste stream, and we are trying to do that while meeting the quality specifications of both our domestic and international customers,” he says. “We have fairly high recovery rates in the U.S., so it’s really things like single-stream recycling that are giving us the opportunity to capture incremental tons. The recyclables coming into the plants are dirtier, and what the Green Fence has taught us is that the challenge is making sure that the volume we are recovering becomes a marketable commodity that meets the quality requirements both in the U.S. and abroad.”
He says he thinks that single stream is an effective way to collect and process recyclables, adding, “Yet, we have to be able to recover the commodities out of that stream and be able to market them to an end user. The Green Fence has really presented some challenges.”
Deadwyler says that while single-stream processing technology has made many advancements since its introduction more than a decade ago, additional advancements are needed to help processors bridge the quality gap that appears when digging deeper into the waste stream.
Concerning the scope and efficiency of single-stream MRFs, he says, “With single stream a lot of it on the efficiency side is that you can increase your throughput with automation and reduce the actual labor costs associated with processing. We have seen dramatic improvements in what the sorting screens and optical sorters can do.
Grab a Front-Row Seat
Greg King, who replaced Erik Deadwyler as senior vice president and general manager of Norcross, Ga.-based RockTenn Recycling, in late August, will be among the speakers addressing attendees at the Paper Recycling Conference & Trade Show, Oct. 16-18 , 2013, in Chicago at the Marriott Magnificent Mile.
The conference’s opening keynote session, “The Future of the Industry,” is scheduled to begin at 4 p.m. Wednesday, Oct. 16. King will be among the panelists, who will share their thoughts on the changes affecting the paper and recycling industry segments and the trends that are shaping their businesses and the paper recycling industry overall. He will be joined by Waste Management Recycle America President Bill Caesar and Pioneer International President and CEO Shawn Lavin.
Recycling Today Events, headquartered in Richfield, Ohio, in partnership with the Paper Stock Industries (PSI) chapter of the Institute of Scrap Recycling Industries Inc. (ISRI), Washington, D.C., organizes the Paper Recycling Conference & Trade Show.
More information is available at americas.paperrecycling
“I think the scope over the past decade has changed,” he continues. “Ten years ago, the focus would have been on sorting paper. In light of some of the declining volumes of fiber in the stream, the scope of these systems now is much more about handling multiple commodities efficiently and trying to get the highest recovery that you can get.”
Deadwyler says RockTenn Recycling is focused on innovation, particularly concerning the organization of the business.
“As one of the largest buyers and sellers of recovered fiber in the U.S.,” he says, “we have taken steps to create a very efficient, customer-focused transaction platform.”
RockTenn has established a 100-person trading floor in Atlanta that supports all of its brokerage transactions. All of RockTenn’s traders are on the same operating system, and managers, including Deadwyler, also have offices on the trading floor.
“Following the Smurfit-Stone acquisition (which was finalized in mid-2011), we had multiple systems and a lot of people in the field supporting our brokerage transactions,” Deadwyler says. “So this is a great opportunity to create efficiencies by centralizing that activity. Our business is a fairly real-time business with a lot of information that needs to be exchanged. Having this very open work environment allows people to interact quickly and efficiently, and that has allowed us to respond better to market conditions and make better decisions.” He adds, “This really allows us to operate efficiently and manage all of the 8 million tons a year that we handle.”
RockTenn Recycling also prefers to take a long-term view of the industry, Deadwyler says, focusing on being a low-cost producer of quality secondary commodities. “As part of that strategy, we are going to continue to invest in new technology at strategic plant locations,” he says, noting the company’s recent investment at its Atlanta MRF, a single-stream facility that includes a drum feeder, triple-deck OCC screen, fiber polishing screens, magnets, eddy currents and optical sorters. “In addition, we’re going to exit our nonstrategic facilities.”
In 2012 RockTenn closed six collection facilities, according to the company’s “2012 Annual Report,” as part of a reorganization of its recycling operations. Deadwyler led this reorganization, which took place in September and October of 2012 and removed about $8 million per year in fixed overhead costs by reducing and redeploying staffing. The company also closed underperforming and nonstrategic recycling plants. Many of RockTenn’s remaining recycling facilities are strategically located near the company’s recycled paperboard and containerboard mills, which helps to ensure supply availability at reduced shipping costs, according to RockTenn.
Deadwyler says RockTenn tries not to be distracted by short-term fluctuations in the industry. “You are always going to have short-term noise in the market,” he says, “with prices going up or down and different conditions; but, we are really just focusing on the core strategic principles of being low cost and efficient in how we run the business.”
Across all of RockTenn Recycling’s MRFs, the company focuses on producing quality products, Deadwyler says. “If that happens, you earn respect and a reputation in the marketplace of being a high-quality shipper and you can ship to all customers in all markets.”
This approach helps to make regulations such as China’s Operation Green Fence a moot point, he adds.
However, mixed grades of paper and plastic continue to draw the attention of Chinese customs officials, regardless of how well-prepared the material is. “The lower-end quality product that comes through some of our operations is where the challenge has been,” he says. Deadwyler adds that when it comes to this material, RockTenn has been able to find alternative markets as well as to clean up the material further. “We’ve been looking at both alternatives depending on the capabilities of the plant as well as the other options. But I think the core issue is that we have to produce a high-quality product.”
Deadwyler, who started in the industry as a recycling coordinator for Independence, Mo., and later held a position with Enron’s pulp and paper trading group, has been with RockTenn since 2002. He took over the recycling business segment in 2006. “At the time we were much smaller than we are today, but we were a very profitable, good size recycling business,” Deadwyler says. “With the acquisition of Smurfit-Stone’s larger recycling business in 2011,” he continues, “we now have a great opportunity because we have the size and scope that came over with the acquisition to build what I believe will be an industry leading recycling business.”
The author is managing editor of Recycling Today and can be contacted via email at email@example.com.
The professional automotive recycling industry does not have to look too far in its rearview mirror to appreciate the type of seismic events that have transformed the American automotive manufacturing industry throughout the past several years. As the Big Three (General Motors, Chrysler and Ford) continue to emerge from the brink of financial ruin with the help of bankruptcy protection and other federal assistance, the U.S. auto manufacturing industry’s foundation and processes have changed so dramatically that its future success now depends on the participation of multiple stakeholders and more innovative market opportunities.
The professional automotive recycling industry is not immune to the effects of such volatile changes within the automotive sector and has responded to these market challenges by adopting new and creative acquisition and consolidation methodologies.
The catalyst for this dramatic transformation is information. There is not a single factor greater than information that is driving the extraordinary changes and advancements within the professional automotive recycling industry. Data drive almost every aspect of a professional automotive recycling business. From the value of automotive parts inventory, insurance claims processing, collision body and mechanical shop estimates to stakeholders’ access to the original equipment (OE) information, data provide the backbone to a sustainable business model for professional automotive recyclers.
With the $170 billion auto insurance market facing its own set of unique challenges, automotive insurers around the world are responding with cutting-edge telematics solutions. Through wireless technology, telematics devices record and transmit real-time data from vehicles back to insurers. Insurers can then use this data to develop more sophisticated pricing models, improve risk management assessments and lessen potential losses through enhanced claims processing.
When used in combination with information technology and analytics, telematics gives auto insurers the ability to transform the data explosion into major competitive advantages. Rather than making educated guesses about a driver’s risk based on traditional factors, such as age, gender, miles driven or accident history, insurers can now make pricing judgments based on hard data and focus on indicators with a more definite connection to actual incidents.
According to a recent report by Celent, a research and consulting firm with U.S. offices in Boston, New York and San Francisco, specializing in the application of information technology, the benefits from telematics will go beyond just merely being able to more accurately price risks for insurers. Claim improvement opportunities are possible, including better fraud detection, reduced cycle time between accidents and the first notice of loss, along with quicker and more clear-cut settlements before the involvement of third parties.
The telematics opportunities for insurers also have significant ripple effects within the professional automotive recycling industry. The technology is likely to modify driving behavior and patterns leading to fewer miles driven and fewer accidents. These outcomes will reduce the number of total loss vehicles, resulting in a decrease in the need for quality recycled parts.
In 2010, Progressive Insurance, Cleveland, moved aggressively to the forefront of telematics-based auto insurance with its Snapshot policy coverage. The program is predicated on real-time data collection to calculate risk based on driving habits and mileage. The information is then used to calculate more precise premium rates and routinely results in insurance prices that are, at minimum, 30 percent lower than those offered by the competition to the same drivers. In a Securities and Exchange Commission filing, Progressive says annual premiums for customers choosing the Snapshot policy exceeded $1 billion out of a total of more than $16 billion in net written premiums for 2012. Progressive is not alone in offering telematics-based driver programs. State Farm, Allstate, Hartford and Liberty Mutual also are moving forward with the technology and programs of their own.
According to a recent report by U.K.-based IMS Research titled “The World Market for Automotive OEM Electronic Systems – 2013 Edition,” the global market for automotive electronics is set to increase to $240 billion in 2020, an increase of more than 50 percent from the $157 billion in 2010. Driven to new levels of importance by government and automotive manufacturers’ safety initiatives, the proliferation of automotive electronics will challenge the professional automotive recycling community to secure the necessary data that will enable it to compete in this emerging parts procurement sector.
With the explosion of sophisticated computer components in motor vehicles, consumer need for access to quality economic alternatives to new part replacements is growing. Regrettably, consumers are faced with a number of challenges in the procurement of quality recycled OEM (original equipment manufacturer) electronic parts.
While automotive parts interchangeability has existed since the 1930s, the rapid advancement of automotive electronics has made all aspects of the recycled parts industry more difficult. The proliferation of electronic parts makes exact part matches even more critical. A robust parts interchange accessible by professional automotive recyclers has and will continue to be an important service for the industry. However, specific part identification numbers and parts inventory data integration are vital for professional automotive recyclers to efficiently and cost effectively provide consumers’ greater access to quality recycled OEM parts for the repair and service of their motor vehicles.
Data and Inventory Quality
American drivers make nearly 25 million automobile insurance claims each year, and insurers, in turn, spend an estimated $100 billion annually to cover those claims. Most insurers and automotive repair shops use specialized computer software to estimate the cost of repair or the value of replacement in the event of a total loss. These software systems rely heavily on data and play a decisive role in the automotive repair industry. CCC Information Services Inc. and Mitchell International Inc. are two of the largest companies in the estimatics markets. Audatex North America Inc. is another significant competitor for sales of partial loss estimating and total loss valuation software.
As the professional automotive recycling industry matures, so does the level of its electronic integration with the major estimating companies. These companies provide insurance companies, along with collision and mechanical repair shops, direct access to comprehensive recycled parts inventory. In turn, these data create opportunities for professional automotive recyclers to list their parts on millions of repairable estimates each year.
As insurance companies seek greater availability of insurance-quality parts alternatives, the parts solution providers are making significant investments in technology to better filter automotive recycler’s parts inventory. It is here that professional automotive recyclers must ensure that their inventories are meeting the Automotive Recyclers Association (ARA), Manassas, Va., Damage Codes and Parts Grading standards. These important standards allow for the use of unified descriptions among all parties involved in selling, buying and installing recycled automotive parts. The greatest extension of recycled parts integration into estimating systems can eliminate the need for phone calls along with reductions in parts back orders and delays which can slow cycle time.
Professional automotive recyclers process millions of OEM parts per year and resell them to consumers, service repair facilities and other interested parties. Being able to readily distinguish those parts that pose a safety concern is of paramount interest to the industry.
In November 2012, the ARA submitted comments to the National Highway Traffic Safety Administration (NHTSA) calling on the agency to require more comprehensive parts data from the automobile manufacturers. NHTSA is currently drafting regulations that would govern motor vehicle and equipment safety recalls as mandated under the Moving Ahead for Progress in the 21st Century Act (MAP-21), Public Law 112-141, signed into law July 6, 2012.
ARA supported the MAP-21 legislation because it builds on current requirements that state that, among other things, manufacturers must provide reports to NHTSA on defects in motor vehicles and will now require manufacturers to submit other information for vehicles covered by recall campaigns, including the vehicle identification number (VIN).
To effectively implement the scope and purpose of this new law, ARA maintains that NHTSA also should require vehicle manufacturers to submit information to the database that describes the OE part identification numbers for both the “recalled” part and the “remedied/replaced” part, along with build sheets complete with textual part descriptions, published service and recall bulletins, remedy/repair procedures and all current and superseded numbers for the recalled items.
Once these data are submitted to the database, NHTSA will need to group them in such way that they can be accessed by third parties in a “batch” format so that these parties can download the complete recall database into their locally installed inventory management systems. This will allow individual inventory management systems to integrate this data so that the information reaches all levels of the automotive supply chain in a streamlined manner. Without this data transfer, NHTSA’s efforts to make recall information more available to all consumers in the automotive supply chain will fall short of its intended results.
Adapting to Change
The advancements in motor vehicle design and significant investments in technology that auto manufacturers and insurers are making have changed the way all industries in the American automotive sector must plan for the future. Those seeking to keep up with the rapid transformation of today’s automotive marketplace must likewise adapt and recognize the need for access to data and play a role in deciding how that information is used.
The proliferation of electronic component parts highlights the importance of parts data to the success of the professional automotive recycling industry. The potential benefits of telematics and integrated wireless technology—many of which have yet to be realized or imagined—and increasing electronics integration within estimating software and the insurance industry are themes that will establish themselves as basic characteristics in the future.
The professional automotive recycling industry has experienced drastic changes throughout its history, and automotive recycling businesses have responded by adapting and transforming to remain vibrant and sustainable players in the automotive parts market. More than ever before, data will drive almost every aspect of a professional automotive recycling business. Recognizing this will be fundamental to building sustainable business models in the future. It is with this confidence that ARA is continually working to secure access to data for its members and investing significant educational, governmental and other resources to ensure that its members are fully equipped for the future.
The author is CEO of the Automotive Recyclers Association, Manassas, Va. He can be reached at Michael@a-r-a.org.
Boring may sound bad, but boring can be good. Think about good old boring Charlie Brown from the comics. He may be bland, but everyone likes Charlie Brown, almost as much as his glowing dog Snoopy.
The world of zinc, lead and tin would fit right in with Charlie Brown. Good old zinc, lead and tin. Except for when something akin to Lucy snatching the football away, which happened earlier this summer in the lead market, base metals are generally characterized by their consistency. (See sidebar, “Battery Producer Takes a Hit,” below )
The markets for zinc, lead and tin tend to be boring and steady, according to most traders. The materials avoid many of the extreme peaks and valleys that are seen in commodities like aluminum or nickel-based materials. Right now, for example, stainless in many parts of the country is in a valley well below where it normally sits. That kind of price displacement rarely happens in these base metals, sources say.
“Nobody is not answering the phone when I call about zinc, lead or tin,” says Jeff Bentley, manager of nonferrous materials at SA Recycling’s corporate headquarters in Orange, Calif.
Bentley attributes the steadiness to the simple fact not enough zinc, lead or tin is moving through the market to accumulate a glut of material.
“If zinc is selling at 80 percent of its intrinsic value today, it was probably selling for 80 percent of its value last week and will be selling for 80 percent of its intrinsic value next week,” he says.
Quantities are not like what recyclers see with MLC (mixed low copper) or bright copper wire scrap. “But we do make sales every month,” Bentley says.
“Lead recycling is one of the oldest industries in the world and has one of the highest product recovery rates (in excess of 95 percent),” says Ed Green, vice president of battery operations for Toxco Inc.’s Baltimore and Lancaster, Ohio, locations. Green is responsible for day-to-day logistics and processing operations.
Toxco’s Trail, British Columbia, location recycles lithium batteries, while its Lancaster plant processes large format lead-acid batteries, nickel-metal hydride batteries used in hybrid and electric vehicles and nickel-cadmium batteries. The company’s Baltimore location is a universal waste handling facility. Kinsbursky Bros., Toxco’s parent company, owns and operates a battery recycling operation in Anaheim, Calif.
“While we don’t have the comparative data of recovering lead from primary sources versus secondary sources (i.e., batteries), we presume that the cost benefit in all areas (electricity, transportation, carbon expenditures and more) is worthwhile and beneficial, especially when considering the limited primary lead activity in the U.S.,” Green says.
Recycled lead accounts for the vast majority—more than 99 percent—of new battery production, according to Janet Karch, director of recycling for Dallas-based Interstate Batteries. Interstate has a closed-loop process and actually recycles more batteries than the company sells, she says.
Karch says she sees the demand outlook for recycled lead remaining strong. “We anticipate the trends that have been seen over the past few years will continue,” she says. “Globally, there will be an increased demand for recycled lead.”
All of Interstate Batteries’ recycled spent SLI (starting-lighting-ignition), or lead-acid, batteries—about 25 million last year—are processed by permitted North American smelters, Karch says.
Battery Producer Takes a Hit
In a business that is notable for its even-tempered markets, the announcement in mid-June by Exide Technologies, Milton, Ga., that it was seeking bankruptcy protection put a cloud over the lead business. Exide is a major producer of lead-acid batteries.
Only the company’s U.S. operations come under the bankruptcy filing. Exide cited higher spent-battery costs and lead-related price increases as putting pressure on the company’s margins.
The real kick came in 2010 when Wal-Mart Stores Inc. moved its battery contract from Exide to rival Johnson Controls, headquartered in Milwaukee, Wis. The move cost Exide about $160 million in annual revenue.
Exide says it is not going out of business. Its Chapter 11 filing does not change the work schedules of its plants or offices, the company says, adding that it intends to continue to fulfill commitments to clients and will continue looking to write new business contracts or renew current contracts as well.
Several operations are permitted to recycle lead-acid batteries, which contain lead and sulfuric acid. (Perhaps the most common lead-acid battery is the one that is used to start your car.) Toxco operates a permitted lead-acid battery operation in Lancaster that processes batteries in one of two ways: Batteries are manually demanufactured into their base components—lead battery plates, plastic and steel. The battery electrolyte is treated on site in a wastewater treatment unit. These components are then sent off site to a Toxco-approved secondary processor, where they are recycled. The second method involves an automated system through which whole batteries are mechanically processed and the materials separated into their base components. In this system, the lead is segregated further into basic components of lead grid (metallic portion) and lead paste (oxides). The plastic and separator materials also are recovered. The battery electrolyte is recovered and treated on site.
Since Toxco is not a lead smelter, all lead materials are ultimately sent to an Toxco-approved secondary lead smelter for recovery.
While California may have the strictest regulations about lead, several other states have mandates to recycle lead-acid batteries, including Ohio. An Ohio law became effective April 25, 2008, prohibiting the disposal of lead-acid batteries in solid or hazardous waste landfills. The Ohio law and those in other states typically require wholesalers and retailers of lead-acid batteries to take back old batteries for recycling when a consumer purchases a new one. Batteries that are covered by the law include those used in vehicles, motorcycles, wheelchairs and boats.
For the most part, such laws target the automotive, or SLI, batteries and were established to capture used batteries at the point of purchase from retail locations.
SA Recycling’s Bentley says his company gets two types of lead: scrap and lead-acid batteries. “In California there is an extra layer of regulatory oversight that makes it difficult to do business,” he says. As a result, SA deals only with companies that the state’s Department of Toxic Substances Control has approved.
For that reason, too, SA typically avoids the export market.
“While we can and do manage these smaller automotive type batteries, our specialty lies with the larger industrial-type lead-acid batteries,” Green says of Toxco.
Fortunately for recyclers, most battery sales, even those involving large industrial batteries, have a component to ensure the battery being replaced is properly managed at the end of life, he says.
Green points to the company’s diverse customer base. “We have business relationships that span the gap from very small producers or generators all the way to large telecom companies as well as OEMs,” he says of Toxco.
“Often our companies are used specifically because the regulations require the proper handling of batteries, and, as all of our facilities are licensed, our customers have the confidence that their material will be properly managed,” Green says.
With 60 years of recycling spent batteries under its belt, Interstate finds laws mandating the process actually supports the company in many ways. “We take responsibility to our stakeholders seriously and have implemented a Green Standard program to ensure that we not only meet the regulations but exceed them where possible,” Karch says.
Interstate Batteries’ Green Standard program focuses on the quality of the company’s collection and recycling procedures, ensuring safe and secure handling of battery cores to minimize environmental and safety risks, the company says.
“We’re seeing no more than normal,” says Randy Katz of City Scrap and Salvage, Akron, Ohio, of the volume of lead the company receives for recycling. Most of the lead City Scrap processes is from lead-acid batteries, though the company also gets lead from weight or barbell sets and some soft lead.
Lead prices seem steady at the moment, sources say. Typically, lead sells for something in the area of 15 cents per pound.
“There’s nothing in the way of change that I have noticed,” Katz says.
While she looks to those who make a living forecasting the future to provide price outlooks, Karch says Interstate Batteries does expect lead prices to remain steady or even increase over the next year.
Green says it is difficult to pinpoint the long-term (12 to 18 months) outlook for lead. “We hope that the market will stay stable,” he says, “but we just don't know, as our crystal ball is broken.”
He adds that while competitive conditions are always present in the industry, the market for secondary lead appears to be in equilibrium, with supply and demand keeping pace.
“KBI/Toxco is a battery-centric business,” Green says. “We are continuously in the market to acquire batteries for our operations.”
Because the available supply of end-of-life batteries can be seasonably affected by extreme winters and summers that have a deleterious effect on batteries, more scrap could be available after a particularly harsh winter or summer, Green explains.
While lead tends to flow through recycling operations at a slow but steady pace, the market for tin and zinc in most areas is barely a trickle.
The market for tin, too, is slow. Block tin scrap is a popular item, as is appliance tin. Much appliance tin comes from spent air conditioning units. While some southern operations will see tin roofs from barns and sheds, this material often is regional.
“The only tin roofs that I’ve seen are at Friendly’s Ice Cream,” quips Katz. However, if he does receive tin of this type, Katz says he would simply run the material through his shredder as sheet iron.
Into summer, the market for tin was weak. “It is slow all over the country,” says Benny Aslam, nonferrous buyer with American Recycling, Fort Worth, Texas.
Although the company shreds a fair amount of tin, its local market has been “OK to slow,” Aslam says. Most of the tin American Recycling sees comes from the public, which brings about 8 cents per pound.
Most new tin scrap—turnings and other material generated in the manufacturing process—never leaves the manufacturer; it is simply reclaimed and reused in the manufacturing process, sources say.
On the West Coast, recycling yards rarely see new tin scrap. However, the electronics industry does generate a fair amount of tin, and the Los Angeles area is home to a tin smelter.
Those who purchase appliance tin usually offer something in the area of $150 to $155 per ton for it at the gate, sources say. Clean tin might fetch another $20 per ton. On a per-pound basis, that figures to 7 cents or 8 cents per pound—hardly worth anyone’s time to collect unless in quantity.
On the appliance side, tin has to be free of Freon (or have the Freon removed on site) before it can be processed.
“The price is so minimal on zinc and tin that you don’t even see it come in,” Katz says of the Ohio market.
Zinc die-cast will go through his shredder, he says. However, so little of it comes into the yard that City Scrap does not even keep track of the volume.
The story is a bit different on the West Coast, where Bentley enjoys a good export market, especially to China. He says it is easier and less expensive to ship the material to China rather than to ship the material to consumers on the East Coast.
“The West Coast has been taking advantage of preferential freight rates [to China] for at least 10 years now,” he adds.
Anywhere there is die-cast production with alloys, there will be zinc scrap. Some comes from the aerospace molding market, but most of the full spectrum of zinc material that comes into the typical operation will be postconsumer.
While boring and slow, at least these base metals are largely predicable.
The author is a freelance writer based in the Cleveland area. He can be contacted at firstname.lastname@example.org.
The global recovered paper markets have been unexciting since the second half of 2012, driven mainly by the lethargic world paper and board markets, the general world economy and especially by the financial crisis in the eurozone and the slowing of the Chinese economy. Real GDP (gross domestic product) growth in the eurozone registered at -0.5 percent in 2012, while China’s GDP growth slowed from 9.3 percent in 2011 to 7.8 percent in 2012, its lowest rate in the past decade. World paper and board output grew by only 0.45 percent in 2012 compared with average growth of 2 percent from 2000 through 2011. As for China, its total paper and board production expanded by only 4.2 percent in 2012, much slower than the average growth of 11 percent seen over the past 10 years. As a result, annual recovered paper prices declined by more than 25 percent for most grades in 2012.
Within the United States
After a soft year in 2012, U.S. domestic demand for recovered paper, especially OCC (old corrugated containers), grew in the first half of 2013, along with a strengthening economy and paper packaging markets. According to the American Forest & Paper Association (AF&PA), Washington, D.C., U.S. domestic OCC consumption totaled about 10 million metric tons in the first six months of this year, up by about 6 percent, or 500,000 metric tons, year over year. Export demand, however, was weak. According to the latest trade data, total U.S. recovered paper exports dropped by 4 percent, or 430,000 metric tons, year over year. China’s Operation Green Fence and its continuously weaker-than-expected general economy and fundamental paper and board demand have continued to put a damper on Chinese recovered paper demand, including imports, and have kept the global recovered paper market sluggish.
In the U.S. market, the average price of OCC dropped to $125 per metric ton in the first half of this year, compared with $145 per metric ton in the first half of 2012 and $175 per metric ton in the first half of 2011. The price of old newspapers (ONP) No. 8 plunged as well to $90 per metric ton in the first half of 2013, compared with $108 per metric ton in the first half of 2012 and $150 per metric ton in the first half of 2011. Similarly, the average price of OCC imported from the United States fell to $215 per metric ton in the Chinese market in the first half of 2013, compared with $231 per metric in the first half of 2012 and $269 per metric ton in the first half of 2011.
The average price of mixed paper in the U.S. market dropped further, reaching $75 per metric ton in the first half of 2013, down from $99 per metric ton in 2012 and $127 per metric ton in 2011.
Behind the Fence
China’s Operation Green Fence is believed to be one of the major factors dragging the global recovered paper market down. Operation Green Fence is a government-backed program set up to block illegal imports of waste into China. This initiative was launched in February by the General Administration of Customs of China (GACC) and will be in place from February through November of this year. No new regulations are involved in the initiative, as the existing regulations already limit the amount of nonrecyclable materials in imported scrap; however, enforcement of these rules has been lax. The new initiative was, therefore, set up to ensure the correct enforcement of existing regulations on waste imports by customs authorities at all major Chinese ports of entry. Because it accounts for the greatest volume among the major imported scrap products, imports of recovered paper, especially the lower grades such as mixed paper, have been particularly targeted since this operation was launched.
Since it was officially announced in February, China’s Operation Green Fence has gained a lot of attention. But how has this program affected the global market so far? According to GACC data, Chinese total recovered paper imports declined by only 1 percent, or 100,000 metric tons, year over year in the first half of 2013. Therefore, the effect of Operation Green Fence seems to be limited.
However, if we dig a bit deeper into the data, we see that most, if not all, of this drop was the result of declining imports into China from Western Europe. Among the top 15 recovered paper exporters to China, seven out of eight Western European countries and regions saw significant declines in their exports to China during the first six months of 2013. Chinese total imports from these eight Western European trade partners dropped by more than 10 percent year over year.
Meanwhile, Chinese imports from the United States, Canada, Japan and Australia all expanded quite significantly, with those from Canada and Australia increasing by more than 20 percent. It is still too early to say at this point whether the changes in the Chinese recovered paper import flows will be temporary or more permanent; but, this is definitely something that deserves people’s attention.
Among the major grades of recovered paper, OCC and ONP imports declined by 1 percent and 7 percent, respectively, year over year in the first half of 2013. Mixed paper, however, posted a 7 percent increase in imports during the same period.
Given that mixed paper has been the main target of China’s Operation Green Fence, this 7 percent growth looks very unusual. Chinese mixed paper imports sourced from North America and Western Europe expanded by 22 percent and 3 percent, respectively, year over year in the first six months. Mixed paper imports from Japan, well known for being cleaner than European and North American mixed paper, however, declined by 2 percent during the same period.
These figures inform us that this 7 percent growth in Chinese mixed paper imports may have come from the correction of recovered paper import claims under the country’s stricter inspection practices because in the past some mixed paper was being claimed as ONP/OMG (old magazines) or other higher grades when it entered China.
Slower fundamental demand for recovered paper from China was another factor in the sluggishness of the world recovered paper markets in the first half of this year. According to the National Bureau of Statistics, China’s GDP growth slowed from 7.7 percent in the first quarter of 2013 to 7.5 percent in the second quarter. According to National Bureau of Statistics of China, along with its weak industrial production and slow GDP growth, total Chinese paper and board production inched up by only 1 percent year over year in the first six months of 2013, while the production of newsprint contracted by 1 percent year over year during the same period. As a comparison, Chinese paper and board output had grown by about 11 percent per year on average over the past decade. Apparently, the sluggishness of the Chinese economy also has slowed its paper and board output and, therefore, has slowed Chinese total recovered paper demand, including demand for imported material.
When I was traveling in China in June and July, I saw stagnancy in domestic collection activities and weak prices for domestically collected recovered paper, even when imports weakened in conjunction with Operation Green Fence. I, therefore, tend to believe that the slowdown in Chinese paper and board demand, and the consequent slowdown in real recovered paper demand, has contributed more to the weakness of the global recovered paper market than has Operation Green Fence itself. The global recovered paper market’s next move will largely depend on where the Chinese economy and paper and board demand head, at least in the near term.
However, prices for certain recovered paper grades, such as OCC, stabilized or even moved up in the third quarter, especially in the U.S. and Chinese markets, as the recovered paper supply in the developed world weakened during the summer holiday season.
Demand also picked up in conjunction with the new recycled-based paper and board projects in North America and Asia. The new recycled-based containerboard capacity expansion in the second half of this year in North America, including Norampac’s Greenpac mill, Atlantic Packaging’s Whitby mill and the announced Boise’s DeRidder mill that is planned to start up in 2014, have supported the strong OCC demand—and the strengthening OCC prices in the third quarter—and will continue to put upward pressure on OCC pricing through the rest of 2013 and in 2014. The expansion in recycled containerboard capacity has been even stronger in China. According to RISI’s latest analysis, more than 2.5 million metric tons of new recycled containerboard capacity was started up in the first half of this year. Looking into the near future, 1.6 million metric tons of new recycled containerboard capacity will be coming online in the second half of this year, and 2.7 million metric tons of new recycled-based containerboard projects are starting up in 2014.
Looking further into the rest of 2013 and 2014, prices for bulk grades of recovered paper are expected to continue strengthening as fundamental recovered paper demand expands gradually along with the general economy and paper packaging demand, though Operation Green Fence and uncertainty in the Asian economy will continue to add some downward risk in recovered paper pricing.
Hannah Zhao, senior economist, Recovered Paper, is the coauthor of RISI’s special studies, Outlook for Global Recovered Paper Markets and The China Recovered Paper Market: A Comprehensive Analysis and Outlook as well as the World Recovered Paper Monitor, the World Pulp & Recovered Paper 5-Year Forecast and the World Pulp & Recovered Paper 15-Year Forecast. She works out of RISI’s Charlottesville, Va., office and can be reached at 434-978-2927-14 or at email@example.com.