Perhaps being set in the city home to the Golden Gate Bridge was an omen of things to come at this year’s BIR World Recycling Convention and Exhibition, May 28-31. San Francisco hosted the event, themed appropriately “Golden Opportunities for a Global Business,” and it seems, at least for some businesses and segements of the industry, that business has indeed been golden.
Some 500 attendees representing companies recycling a wide array of materials gathered at the San Francisco Marriott to listen to presentations covering the state of several recycling industry segments, including metals, paper, plastics, tires and textiles. Attendees traveled from more than 35 nations on every continent to compare notes and seek out business opportunities with fellow recyclers.
Although there may be exceptions, the overall consensus is that secondary ferrous, nonferrous and paper markets are doing well. BIR attendees, who had not gathered since the fall of 1999, were grateful that the dawning of the year 2000 with its predicted “Y2K” calamities, did not seem to negatively affect industrial markets in any part of world.
Russia Helps Fill Nonferrous Demand
Robert Stein, of Louis Padnos Iron & Metal Co., Holland, Mich., said that the outlook for the nonferrous market around the world is good. Higher prices for many of the sector’s commodities have increased the flow of material as well as expanded margins.
Because the economies of the Asian and Pacific Rim nations are gradually improving, demand for all secondary metals in these regions is steady.
Stein also said that the low value of the Euro against the U.S. dollar is a significant factor in European nonferrous trading. Italy’s imports have fallen and intake of Russian copper and brass scrap has almost stopped completely. However, shipments of aluminum scrap and ingots continued from Russia, helping to support a strong Italian home market.
In general, the North American market is healthy and the outlook is steady, Stein says, as long as the U.S. economy continues to withstand higher interest rates.
A speaker from the United Arab Emirates noted that increased construction activity in the Persian Gulf area has caused an increase in scrap generated there. Due to the economic revivals in Taiwan, South Korea and Malaysia, much of the scrap has been heading to east Asia. If the Japanese economy recovers by the end of the year—it is possible that 70% of the Persian Gulf’s nonferrous exports would be to Japan, South Korea and China.
Opening remarks for the Stainless Steel and Specialty Alloys session from Chairman Michael Wright of ELG Haniel GmbH, Sheffield, England, pointed out that the stainless market today is very strong, in comparison to its condition one year ago.
Last year, the market was in a recession, there was low demand for finished goods and cutbacks in stainless production lead to low demand for nickel and stainless scrap. However, Wright pointed out that by October 1999, the market was seeing an increase in demand and higher prices—trends that have continued on into 2000.
This year, stainless steel is in growing demand from manufacturers of commercial food preparation equipment as well as from makers of a wide range of domestic appliances and equipment. After a recession during the last two years, the capital goods sector was on a rebound from growth projected at 10% this year and 7% next year. This would be good for stainless plate and bar.
Wright forecasts that for the stainless market in 2000:
Jim Lennon of British-based Macquarie Research Metals & Mining, remarked that primary nickel production is rising very strongly this year, starting at 15.5% in the first quarter. In the final quarter of 1999, stainless steel production had hit a growth peak of 14%, which was a major driver in the nickel market. This year, nickel consumed in scrap has risen by 13% over 1999 levels, although no more than 3% growth is being forecast for 2001.
FERROUS SCRAP’S TRANS-OCEANIC VOYAGE
Imports vs. exports is the hot topic in the ferrous market. According to Robert. W. Philip, president of Schnitzer Steel Industries Inc., Portland, Ore., the historical role of the U.S. as the world’s largest scrap supplier has changed. Now, the U.S. is in second or even third place in export tonnage, while imports flow into the country at record levels.
Europe, Russia, the Ukraine, South Africa and Australia are providing tough competition for the U.S. on the export front, according to Philip. “The cloud on this horizon will be the nagging question of how the scrap flow from these sources is controlled and by whom,” he commented.
Stephen W. Wulff, president of the David J. Joseph Co., Cincinnati, said that in recent years supply growth had matched or exceeded the most dramatic expansion in scrap demand on record. However, prices peaked early in the period, during which annual crude steel production in the U.S. had increased by nearly 18 million metric tons. While domestic supply had risen, Wulff said requirements had been met mainly by imports.
Wulff suggests that by the years 2004-2005, the U.S. steel and foundry industries could be facing an era of tighter markets for scrap and alternative melting units.
Craig Schulz from the Steel Service Center Institute, Chicago, said that automobile demand in North America is at an all time high with 18 million units per year. Worldwide, demand is expected to increase strongly as developing nations continue to industrialize, he said.
APPETITE FOR PAPER GROWING
By all accounts presented, the paper market fared well all over the world in the first half of 2000, with both demand and prices rising.
In Turkey, the combination of the winter season collection difficulties, high demand and low stock in mills resulted in prices beginning an upward trend in the latter part of 1999 and continuing on into 2000.
In the U.K., the predicted downturn in demand for finished products and consequent raw material stock-building in anticipation of Y2K-related difficulties did not occur, resulting in paper mill order books remaining at reasonable levels. This has lead to an increase of about 1.5% in domestic paper production in the first quarter over a similar period last year.
For Estonia and other Baltic countries, the recovering paper market is very good, with increased prices being paid for practically all grades. As Estonia, Latvia and Lithuania strive to stabilize their markets to achieve European Union membership, the exceptionally good market situation for recovered paper has, as a side effect, caused many amateurs to delve into the paper recycling market without proper experience. This is disturbing the operations of the established companies and driving prices up further.
According to Steve Vento of Recycled Fibers International, Sunrise, Fla., total U.S. exports of recovered paper in the first quarter of 2000 stood at 2.3 million short tons compared to about two million short tons for the same time last year, a 13% increase. Until recently, both the domestic and export markets have remained stable for the low grades of news, corrugated and mixed paper, but there has been more emphasis by paper mills to increase their consumption of mixed paper. Generation has not necessarily been able to keep up with this increased demand. In April, many domestic container board mills took downtime and some mills took more downtown in June, which could weaken the corrugated prices.
In addition, prices for wood-free de- inking grades such as coated book, sorted white ledger and sorted office paper decreased dramatically in April and May. At the same time, some major overseas buyers of these grades have also announced high inventories of recovered paper. Vento says that the decrease in generation that usually takes place in July and August could help to stabilize the market. RT
The author is the Internet editor for the Recycling Today Media Group.
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