The COVID-19 pandemic has deeply affected the way the metals industry works. The two-month shutdown in the second quarter of 2020 weakened demand considerably. Just as things began to look up for the industry after manufacturers and the automotive sector resumed operations in June, the steel industry, which already was reeling financially and in terms of trade volumes, was dealt another blow. The three largest credit insurance companies, Atradius, Coface and Euler Hermes, slashed financial limits, saying they would require more coverage acceptance. This exacerbated the headwinds, especially for smaller players.

A catch-22 situation

Demand for ferrous and nonferrous metals and scrap surged through Q3 of 2020, with many small and big companies alike looking to finish the year with stronger-than-expected order books. Yet, the issue with credit insurance continues to impede the progress of smaller companies, including steelmakers, foundries, smelters and scrap dealers. These smaller players, especially, have experienced poor results primarily in light of reduced volumes. With reduced or no credit insurance, their financial dilemma has had a cascading effect throughout the supply chain.

Big steel companies such as Nucor, Big River Steel and Steel Dynamics Inc. have weathered this challenge better than many of the smaller companies, industry sources say. For companies that are deeply integrated into the automotive supply chain, the credit insurance issue has been lessened. But, for others, credit insurance has been reduced to minimum levels or canceled altogether until insurers are satisfied that they will be able to pay up.

Therefore, a combination of poor financial results along with anticipatory challenges throughout the industry has created a difficult credit insurance market for most companies.

Hedging their bets

For suppliers, the challenging credit insurance market has created a dearth in the number of covered clients, which, in turn, has forced them to look elsewhere to sell their volumes. An industry source reveals that coverage has shrunk to levels where it is difficult to do business unless the buyer pays upfront, forcing suppliers to hedge either through discounts or other incentives. Some market participants admit to giving discounts to ensure they are paid fully on delivery. These discounts must be factored into the cost of the material they are selling, which means many suppliers are now being faced with the difficult choice between eroding profitability immediately or accumulating bad debts in the long term.

On the purchasing side, some buyers also are offering premiums to their suppliers to entice them to sell into companies for which credit insurance is unavailable. Suppliers, however, are hedging their bets and opting for such offers only if the facility is close enough for the supplier to have a face-to-face negotiation. In general, suppliers are avoiding such deals with companies they must export to or those that are far away, even if they are within the U.S.

Adding risks

For many steelmakers and ferrous scrap suppliers, the credit struggle poses the risk of steel imports increasing. The American Iron and Steel Institute, Washington, reported steel import permits at 1.64 million tons in October 2020. While this number was flat from the previous month, it reflected a 30.8 percent increase from actual imports in September 2019. With credit insurance challenges remaining, sources say they expect this volume to increase.

For many suppliers on the nonferrous side, the surging London Metal Exchange (LME) and COMEX markets are not helping matters, either, as prices for aluminum, zinc and copper continue to rise. COMEX copper reached its annual high of $3.20 per pound three times in a span of two months and has remained at that level as of early December of last year. The LME zinc market also breached its June 2019 high the week of Nov. 13, 2020, reaching $1.21 per pound. Aluminum also rose steadily in November, with the official three-month LME contract hitting a high of $1,995 per metric ton Nov. 20.

Sources note the reduction in client coverages, which makes protecting their sales—a critically important risk- mitigation tool—even more challenging. The rising LME and COMEX markets are further eroding buyers’ overall credit coverage, making sales difficult.

Looking ahead

The industry believes the status quo will remain at least until the second quarter of 2021. While improving demand and a robust export market on the ferrous side have alleviated some of the challenges that were faced by the smaller players, sources still are waiting for steelmaking capacities in the U.S. to reach their prepandemic levels of 79 to 80 percent before they breathe more easily.

A market participant notes that green shoots already are visible as infrastructure and construction spending around the world improves and, therefore, increases demand for steel products. Stronger order books, in turn, are helping companies to return to financial stability, which is key to improved credit insurance coverage.

Demand on the nonferrous side, especially in the copper market, has remained tepid; but, even here, suppliers and consumers say they are hopeful for improved demand and financial results across the supply chain, which would improve credit insurance.

Radhika Ojha is an editor at Davis Index and can be reached at radhika.ojha@davisindex.com.

For recyclers, the first decade of the 21st century was marked by unrelenting demand for secondary commodities from buyers in the People’s Republic of China.

In the case of red metals and plastic scrap, in peak years, Chinese ports received between one-quarter and one-half of the ocean-bound trading volume. Millions of tons of recovered fiber flowed in annually, peaking at more than 29 million metric tons in 2015. A double-digit percentage of the global aluminum scrap trade also headed to China, and while the percentage of ferrous scrap trade was not as high, Chinese buyers competed with those from South Korea, Taiwan and Japan for ferrous scrap off the U.S. Pacific Coast.

In the last decade, the trading climate changed dramatically—not because Chinese manufacturers did not want scrap, but because China’s government enacted measures to stem the flow of what some of its government officials considered unwelcome trade. These measures culminated in a decree to ban the import of all scrap materials as of Jan. 1 of this year.

However, as 2021 begins, newer steps taken by the government have reopened the door for high-grade aluminum and red metal scrap, and a similar program is underway to allow more than a dozen ferrous and stainless steel scrap grades.

From garbage to resource

The journey of scrap materials in China from hot commodity to banned “foreign garbage” to a “resource” designation has presented difficulties to U.S.-based traders and processors, who have had to adjust with each regulatory change.

The biggest adjustments have been made by Chinese companies that had relied on imported scrap as the key component in their business models. Some of the firms were able to switch to different raw materials. Many others, however, “voted with their feet,” establishing facilities in other nations that mimicked the operations they had been running in China. Malaysia has been a beneficiary, with some Chinese business owners relocating processing and smelting operations to that nation.

The willingness of such companies to invest in these geographic moves helped portray what organizations such as the Washington-based Institute of Scrap Recycling Industries (ISRI) or the Brussels-based Bureau of International Recycling had long voiced: Scrap materials are not “waste,” and there is no viable business model that involves shipping “garbage” several thousand miles across an ocean.

Why the “foreign garbage” narrative was adopted by China’s central government is not entirely clear. Theories include that it essentially was a protectionist measure enacted because such a high percentage of containers arriving in Chinese ports contained scrap metal, paper and plastic. Another theory attributes the opposition to imported scrap to Chinese President Xi Jinping having watched a documentary that portrayed a particularly poorly managed (from an environmental, health and safety perspective) plastic recycling operation in the country.

The China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA), based in Beijing, was among the organizations maintaining a dialogue with Chinese government agencies to keep the door open to overseas scrap materials. On the ferrous side, the China Association of Metal Scrap Utilization and the China Iron and Steel Association reportedly have played a similar role.

A recognition that China’s manufacturing sector would suffer if all scrap materials were instantly banned seemed to eventually find additional adherents within the Middle Kingdom. Redesignating some scrap as raw materials that can meet the requirements of a Chinese government-created standard has allowed, in the near term at any rate, the international scrap metal trade to return to China.

Keep it clean

Chinese government agency pronouncements leading up to the new scrap metal resource grades, and the phrasing in the specifications for those grades, make it clear the nation’s government wants to accept materials that appear clean and uniform. Nonmetallic content is particularly unwelcome.

The resource designations for copper, brass and aluminum scrap set purity standards in the 97 to 99.9 percent range, often higher than spelled out in ISRI specifications. Some processors and traders have told Recycling Today, however, that a welcome aspect to the new regimen is the phasing out of the China Certification & Inspection Group (CCIC) preinspection process.

One trader says, “Using CCIC involved time delays and spending money; but, in return, we received very little advocacy if a shipment failed inspection and certainly never a refund.”

Scrap shipments designated as resources will instead be subject to a visual inspection and a sampling process when they arrive at a Chinese port.

Per the copper specification, among the things port inspectors will be looking for are traces of “wood waste, waste paper, waste plastic, waste rubber, waste glass, stones and powders (dust, sludge, crystalline salt, metal oxides, fiber powder, etc.)” in the shipments.

The goal of the purity level means predominantly furnace-ready copper, brass or aluminum “raw materials that can be directly produced and used that meet the requirements of this standard” are intended to pass inspection, according to the GB/T 38471-2019 standard of China’s State Administration of Market Supervision and Administration of its National Standardization Administration.

However, mixed shredded metals are not being excluded, with a standard for zorba reportedly set at a minimum aluminum content of 91 percent, with a nonmetallic contaminant threshold of 0.9 percent (or a minimum 99.1 percent metals content).

By early December, traders had been reporting that shipments of red metal scrap were passing the inspection and sampling process within hours of arriving at ports such as Ningbo, China. (One trader indicates buyers are testing the waters with No. 1 copper shipments, showing hesitancy as to whether No. 2 copper can pass the inspection and sampling process.) Aluminum traders say that, likewise, aluminum scrap grades are being approved for import into South China.

In the processing sector, David Dodds of Ipswich, United Kingdom-based Sackers Recycling refers to the situation at the end of November as remaining “uncertain.” He adds, “Our sales channels assure us that the inspection is robust and safe, but it is a delicate balancing act as the cost of returning the container is very high.”

On the positive front, “The shipping lines are now beginning to quote and release equipment to major ports in China,” he says.

The resource designation and the implementation of new resource standards for ferrous and stainless steel has trailed the activity in the nonferrous sector by several months. However, the implementation process that was established for red metals and aluminum likely can be replicated for the steelmaking grades, potentially quickening the timeline for those buyers.

As of early December, the timeline for approval of the ferrous and stainless grades had not been established. The specifications for these grades do not directly mention nonmetallic contaminants. Instead, they focus on the size and origin of permitted cut and shredded grades.

A distant mirror

Recyclers and traders indicate the creation of the new resource grades is a welcome alternative to an overall ban on scrap or to the quota system, which they say provided a lack of predictability or clarity in 2019 and 2020. But to what extent will the new system bring back the heyday of high-volume scrap trading between the U.S. and China?

Many factors affect trade volume across the Pacific Ocean:

• the health of the U.S. economy, where scrap must be generated in surplus amounts sufficient to support a buoyant export market;
• the health of the Chinese economy, which continues to register growth, but where skeptics remain concerned about ongoing government and state-owned enterprise spending is yielding diminishing returns;
• the wider political relationship between China and the U.S. and how and whether the two nations put new punitive trade measures in place stemming from economic or political issues;
• the extent of processing and melting capacity that has left China for the Association of Southeast Asian Nations (ASEAN) region or other nearby nations and whether any of it will return to China;
• the enforcement of the new inspection and sampling process and whether it will be uniformly applied at Chinese ports or cause grief for traders and shipping lines that already have expressed reservations about financial liability; and
• the state of relationships between U.S. processors and traders and buyers based in China and whether all parties concerned are convinced a stable set of rules is in place that can stave off “pass the buck” situations concerning rejected shipments and subsequent container demurrage or repositioning charges.

Should all those circumstances break favorably, one more is likely to prevent the return to mid-2010s trading volumes: China’s ability to generate its own ferrous and nonferrous scrap.

On the ferrous side, several analysts have concluded that the nation has erased its scrap deficit and that requests for imports are tied to Chinese electric arc furnace (EAF) mill buyers wanting access to higher grades with chemistry requirements that are not abundantly available within China.

Demolition activity and end-of-life vehicle generation in China, likewise, are bringing to market more copper and aluminum scrap. However, it is less clear to what extent the nation is nearing nonferrous scrap self-sufficiency if it wishes to fully feed its own secondary aluminum or brass producers.

The potential for China to buy more than 4 million tons of imported red metal scrap—or the former peaks of aluminum or ferrous scrap—is thus muted by a number of ways the world has changed in just five years.

Volume limitations notwithstanding, in an industry sector that is best served when all trading opportunities can be explored, a pathway of any sort to the world’s largest collection of steel, aluminum and copper melt shop capacity is a welcome development in 2021.

The author is senior editor with the Recycling Today Media Group and can be contacted at btaylor@gie.net.

The arrival of the COVID-19 pandemic meant 2020 was an unprecedented year. Order and normality were replaced by chaos and uncertainty. With global events unfolding unpredictably daily, nobody knew what the months ahead had in store.

At the outset, the future looked grim, but gradually the needle began to point toward an emerging global recovery.

To attempt to understand what this year could promise for the copper market, we first need to review some of the fundamental forces that were at work in 2020 and consider how they could change.

A price roller coaster ride

On Dec. 1, 2020, the London Metal Exchange (LME) copper cash price hit its highest level since March 2013 as it closed at $7,675 per metric ton ($3.48 per pound). Copper charted an unlikely trajectory through 2020. Initially, prices plunged 27 percent from $6,301 per metric ton ($2.86 per pound) in January to a low of $4,617 per metric ton ($2.09 per pound) in late March as the global impact of COVID-19 became apparent.

But copper prices quickly stabilized and then began to rally, completing a full recovery to above and beyond their January 2020 starting point. As of early December of last year, the copper price had rallied 66 percent in just eight months from its March low, making it the most resilient of the LME base metals. What complex mix of forces explains the red metal’s stunning reversal of fortunes and its optimistic outlook?

Auto wiring harnesses were the worst affected product. Vehicle sales slumped, and wiring harness assembly plants, staffed by thousands of employees with little physical separation, became an ideal environment for spreading the virus. Reduced auto production also affected demand for electrical motor windings and connector strips.

Plumbing tube sales and building wire demand also were hit badly by reduced activity on construction sites at the height of the pandemic and destocking of the supply chain. By contrast, utility power cables, renewable energy projects and electric vehicle (EV) battery foil scarcely were affected by the recession.

In the world excluding China, consumption in 2020 was at its weakest in April and May (usually the seasonal peak), and thereafter began a sequential recovery, pausing only for August holidays in Europe.

Some fabricators in Italy, Malaysia and Brazil halted operations for several weeks as government movement- control orders made it impossible for them to run their businesses. In general, nationally, the number of infections correlated with the degree and length of economic disruption and the effect on underlying copper consumption.

Brazil, Mexico and India appear to have been the most severely affected and could see annual demand drop by more than 25 percent. They might take several years to recover to precrisis levels.

Almost every nation other than China will record a decline in copper consumption in 2020, with Roskill forecasting a total decrease of 10 percent.

Photo by Brian Taylor

Rebound possibilities

In China, the worst economic effects of the pandemic were concentrated in January and February. Thereafter, a strong sequential recovery took place from March to July across most end markets. This recovery began to lose a little momentum from August onward.

With China totally destocked as it entered 2020, and with some progress made in the trade war with the U.S., the sudden surge in wire and cable orders brought capacity utilization levels at cable making plants up to 100 percent by April, according to Shanghai Metals Market industry surveys.

This stimulated a rush in orders for wire rod to feed this requirement, which led to positive year-on-year growth in wire rod production from March to September. Major contributors to this were a 145 percent year-on-year explosion in investment on renewable wind power generation combined with other infrastructure spending. These factors, along with the commissioning of several new large wire rod plants that were ordered 12 to 18 months previously, are estimated to have resulted in total consumption growth of at least 4 percent to 5 percent.

The recovery in Chinese demand has been sufficient for its regional trading partners, Taiwan and South Korea, to record positive growth in copper demand in 2020. This leads Roskill to conclude that nations with the strongest trading links to China will be the fastest to recover economically in 2021. But China’s wider influence on the copper market has been far greater than its contribution to consumption.

After a 3 percent decline in world copper consumption in 2020, Roskill is expecting a healthy rebound of 5 percent in 2021. The rest of the world, chiefly Europe, Japan and North America, will be the main engine of the recovery, with year-on-year growth peaking in the second and third quarters as the normal seasonal pattern returns. Automotive (especially EVs), residential construction and renewable energy projects are forecast to be the best performing end-use sectors.

Looking ahead to 2021, Chinese growth will be positive but much lower than in 2020, probably peaking in the first half. Wind energy projects, air conditioning equipment and EVs probably will be the strongest end-use sectors. Much greater availability of imported scrap significantly will limit cathode demand expansion in China.

Supply-side turbulence

Roskill estimates that disruptions to global copper mine supply could have totaled between 750,000 to 1 million metric tons during 2020. Mines or smelters in Panama, Peru, Chile and the United States have had ongoing operational difficulties. (See the sidebar, “Digging into problems,” above.)

Because of the 2020 mine and smelter disruptions, global treatment charges and refining charges (TC/RCs) currently languish at multiyear lows. That circumstance reflects tight availability of clean concentrate compared with endemic global smelter overcapacity, with 750,000 metric tons of such capacity set to be commissioned in China next year alone.

Mine supply was not the weakest link in the global copper supply chain—it was international trade in scrap. Scrap is an integral part of global copper business, accounting for more than one-third of the total market through its contribution to supply and demand.

Recycling is a complex multistage business with people fulfilling a function at each step. You need people to collect it, buy it, sort it, process it, ship it and sell it. The lockdown blocked many links in this supply chain from operating effectively.

Beyond the supply hiccups, China—which previously imported half of the world’s scrap—imposed its quota system, serving to cut its red metal scrap imports by 50 percent in the first half of 2020.

In 2021, Roskill expects world scrap supply and international trade flows to normalize. Elevated copper prices should encourage scrap flows.

The new system permitting the unrestricted import of scrap (redesignated as a “resource” provided it meets a purity standard), meant to be introduced July 1, 2020, was delayed until Nov. 1, 2020, effectively extending the 50 percent quota system supply curtailment for four months.

Roskill estimates the quotas starved China of 300,000 metric tons (as measured by copper content) of scrap in 2020. The COVID-19 operating constraints and China’s blunt enforcement of quotas ensured that not only was the downturn in the international scrap trade more severe than for primary raw materials, it also was going to be more long-lasting, in fact throughout 2020. The latest data confirm a 26 percent year-on-year decline in world copper scrap imports in January to July 2020, including a 37 percent plunge in Q2.

In 2021, Roskill expects world scrap supply and international trade flows to largely normalize. Higher copper prices should encourage the release and flow of more scrap, which will be in high demand.

Teething problems are to be expected with China’s new import system, but these should gradually be overcome as experience is gained on both sides. Chinese secondary producers and fabricators are poised to aggressively expand their scrap imports in 2021 to replace the expensive cathode that they were compelled to buy in 2020 because of scrap supply shortages.

Calculating a price range

During 2020, several factors were important in determining the level and direction of copper prices. The first effects to be felt were the negative impact on demand, which resulted in a rise in cathode inventories on exchanges and in Chinese bonded warehouses until late March.

Prices slumped and, combined with the constraints posed by the virus and Chinese quotas, international trade flows in scrap constricted sharply. Then came the first indications of the spread of infections affecting mine output in the Americas.

The final stage began in June, when China dramatically accelerated its imports of refined copper to a level far beyond its immediate consumption capacity. After this continued for several months, it became clear that this was part of a deliberate restocking and strategic stockpiling effort involving the major trading houses and the State Reserve Bureau.

Roskill estimates that China could have accumulated 700,000 metric tons of “unreported” inventory in 2020, material that is now permanently denied to consumers elsewhere. This artificial tightening of the refined market drove prices steadily higher, with the weak U.S. dollar contributing to the rally in November.

After a $6,000 per metric ton ($2.72 per pound) average in 2019, copper likely will average $6,150 per metric ton ($2.79 per pound) in 2020—an exceptional outcome considering where the industry found itself in late March.

With LME prices trading at the rarefied heights of $7,600 per metric ton ($3.45 per pound) in early December 2020, it is not surprising to see some market commentators calling it a structural bull market with future price projections of $9,000 to $10,000 ($4.08 to $4.54 per pound).

However, with aluminum prices currently averaging a bit more than $2,000 per metric ton (91 cents per pound), substitution pressures would intensify quickly. Though very high prices cannot be discounted as a possibility, we believe it is an unlikely one.

Chinese cathode purchases certainly will slow in 2021, and the speed of the recovery in the rest of the world is uncertain.

Scrap often has been described as the “unseen hand” of the copper market. With its supply set to improve markedly after multiple constraints through 2020, we would not be surprised to see it constrain the upward movement in LME copper prices. Roskill forecasts that LME copper prices could average $7,400 per metric ton ($3.36 per pound) in 2021.

Jonathan Barnes is the principal consultant, copper, for United Kingdom-based commodity research firm Roskill. He helped prepare the second edition of that company’s “Copper Demand to 2030” report. He can be contacted by email at jonathan@roskill.com.

It’s been seven years since brothers Andrew and Paul Gallo took over leadership at DMS Metals Ltd., formerly Don Mills Steel and Metal (1974) Ltd., their family’s metal recycling facility in Stouffville, Ontario, but the brothers have been consistently looking for ways to take the business to the next level.

Andrew spent two years practicing law before transitioning to a leadership role at DMS Metals, and Paul came to the business after receiving a bachelor’s degree from the University of Western Ontario.

“The plan was always to continue with the legacy that our dad built and take it to the next level,” Andrew says. “We knew it would be really hard for him to have to sell the business. I’ve been able to bring some skills from the legal world, and Paul’s always had a knack for business. We’ve built up some good momentum since we started, and the plan is to keep that going.”

DMS Metals Ltd. operates a 25-acre scrap recycling yard just north of Toronto. The company employs 35 people and provides ferrous and nonferrous recycling services, as well as brokerage services.

“When we first transitioned to full time in the business, our dad would tell us that if we wanted to truly grow the business that we needed to invest in an automotive shredder—and we thought he was crazy because of the magnitude of such a machine,” Andrew says.

“But, as time went on and we navigated Ontario’s competitive marketplace, we realized that he was right.”

Paul confirms that it was certainly intimidating to consider getting into the auto shredding business and making that kind of an investment. But by 2018, both brothers felt as though they were ready to take that step for their business.

The brothers began to shop for an auto shredder in April 2018. By January 2019, DMS Metals purchased an M6090 shredder with a nonferrous downstream system supplied by Wendt Corp., Buffalo, New York. The equipment was up and running in January 2020 and has been operating for about a year.

Paul says they decided to invest in an auto shredder for many reasons, but the main reason was to become less reliant upon the megashredders operating around them.

“We really want to be self-sufficient with processing materials, not having to rely on the behemoths in our area,” he says. “We have now made ourselves much more competitive with all of the materials that come through our door.”

Getting started

Wendt Corp. worked with DMS in the summer and fall of 2019 to install the M6090 auto shredder and nonferrous downstream system.

Andrew says the installation took about six months. Although weather is sometimes a concern for outdoor equipment installations in Ontario in the fall and winter seasons, he says DMS lucked out with mild weather conditions. “We were certainly concerned about how inclement weather could impact the installation, but we ended up having a good winter, so we are lucky in that regard,” he says.

DMS added 10 new employees with the addition of the Wendt M6090 shredder and nonferrous downstream system. Paul says the auto shredder hit its target of processing 8,000 to 10,000 tons per month by its second month of operation. He adds that Wendt was helpful in getting the machine up to speed to meet that target.

The brothers say the new nonferrous downstream system also has helped DMS Metals to improve its processing capabilities.

“The actual shredder is just half of the equation,” Paul says. “If we didn’t have the nonferrous downstream system with it, we’d be in the same boat as before, having to rely on other processors. We’ve increased the number of products that we can sell directly to consumers, which puts us in a much better position.”

DMS decided against directly connecting the shredder and nonferrous downstream system. Instead, material that is shredded drops to the ground, and mobile equipment operators pick up and transport the nonferrous materials to the offline separation system.

Andrew says having the two machines operating independently enables more strategic processing with better versatility.

The Gallo brothers also received maintenance tips from Wendt Corp. and some of that company’s customers that they used to develop a plan that would work best for their facility. Before the installation, Paul says they visited five other scrap yards using the Wendt M6090 to get an idea of how the machine worked.

“That community was very helpful,” he says. “We were able to develop a maintenance program around what we learned and what would work best for our company. We learned that while we’re all trying to accomplish the same things with maintenance, everyone ends up doing things a little differently,” Paul adds.

“Once we began shredding, we established our own [maintenance] method—for every hour of shredding, we spend about 30 percent of that time on maintenance,” Andrew says. He adds that most of the maintenance is preventative in nature.

Wendt has been helpful in the months since the installation if DMS ever runs into issues with the new equipment, Andrew says.

“Wendt was helpful through the whole process. There was a time not long after we started shredding when we had a small hydraulic issue,” he says. “We called Wendt at 8:30 in the morning. They sent a technician from Buffalo, New York, who was on-site at 11 a.m., and we were back shredding before 1 p.m.”

Boosting competitiveness

Since starting its auto shredder and nonferrous downstream system, DMS experienced some supply-related challenges in the spring of 2020 arising from the COVID-19 pandemic.

“A lot was shut down,” Paul says. “The supply chain was in shambles; a lot of our customers—the mills, the foundries—weren’t running.”

The second quarter of 2020 was a tough time to buy and sell material, but DMS never shut down, and it continued to move material through its yard. While it took several months to get back on track, Paul says material is flowing as strongly at the end of 2020 as it was prior to the pandemic.

Andrew and Paul say they also are fortunate that they were able to install the auto shredder and nonferrous downstream system just before the pandemic hit North America.

One big advantage to getting into the auto shredding game last spring is self-sufficiency.

“Prior to having a shredder, we were at the mercy of dealing with other local auto shredders,” Andrew says. “As we started to grow, we found it was harder and harder to place our tons competitively,” he adds.

DMS also had been receiving more consumable (i.e., shreddable) items in recent years as Toronto’s population has been growing.

The brothers also have been working to grow DMS’ brokerage business. Paul says having auto shredding services gives them another offering for some of these customers.

Paul describes their shredding operation as more tailored than those of megashredders. “We can get through tons if we need to, but because we’re smaller, we’re also set up in a way where we can run specialty items and maintain the quality that needs to be maintained with these types of foundry items, both on the ferrous and nonferrous side,” he says.

“We’re more than just an auto shredder,” Andrew says. “We make over half a dozen different products—which includes some specialty items.”

Overall, the recent investment has helped DMS to become a more competitive yard with more opportunities to grow. Andrew says the investment has made him enthusiastic about DMS’ future. “We can process a lot more tons now,” he says. “It’s allowed us to buy different types of items more aggressively. It’s opened up a lot of doors with foundries and mills, as well, because we’ve been able to make a lot of different products we hadn’t been able to before.”

Andrew says that some new business from the shredder led to an acquisition opportunity. In the fall of 2020, DMS acquired Midwest Metals, which is in Creemore, Ontario, just an hour northwest of the company’s main yard in Stouffville.

The author is managing editor of Recycling Today and can be contacted at msmalley@gie.net.