China, the world’s largest consumer of red metals, originally indicated it would allow high-quality nonferrous scrap imports to enter the country in July without being subject to quotas. That deadline came and went, however, without the change being implemented. Traders and recycling associations are reporting that the Chinese government wants to establish a registration system for exporters before giving the go-ahead to the new classification system.
The Beijing-based China Nonferrous Metals Industry Association Recycling Metal Branch (CMRA) has notified overseas traders that they have until Sept. 3 to apply for what it describes as a no-cost qualification certificate to ship high-grade copper and aluminum scrap grades to China under its new system.
The request for information involves paper and electronic forms and appears to be similar to the type and quantity of information overseas companies have submitted for General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) licensing under the prior import system.
On a question-and-answer page (in Chinese) on its website, CMRA says the registration information is not mandatory but that “qualified overseas suppliers will [have] priority for preshipment inspection.”
The China Inspection Group will remain involved in the scrap exporting process, as it was under the AQSIQ regimen, according to the same Q&A page. However, “Companies that already have AQSIQ certificates still need to reapply” for the new certificate, CMRA writes.
“To place this in its proper global context, China has imported more refined copper in the past two months than Germany—the world’s third-largest consumer—used in the whole of 2019.” – Jonathan Barnes of Roskill
An analysis by London-based Roskill shows China’s inability to import copper-bearing scrap as a result of its current quota system and policies has caused a shift in its red metal trading patterns.
An Aug. 14 analysis by Jonathan Barnes of Roskill says the quick rebound in China’s infrastructure-driven economy after first-quarter COVID-19 impacts shows the nation is still hungry for metal.
However, the Chinese government’s strict quotas on copper scrap—followed by a delay in introducing the new scrap import system—has created a 300,000-metric-ton shortfall in copper units so far in 2020.
This “deficit in secondary supplies is one of the main factors explaining the 675,000-ton surge in Chinese refined imports to 2.6 million metric tons” in the first seven months of 2020, Barnes writes. He continues, “China has more than doubled its imports of secondary ingot to partially compensate for the halving of its scrap purchases.
“To place this in its proper global context, China has imported more refined copper in the past two months than Germany—the world’s third-largest consumer—used in the whole of 2019,” he adds.
The Roskill analyst says the lack of scrap “has been instrumental in contributing to the incised V-shaped rebound in prices” for copper.
While U.S. sources say retail and industrial nonferrous scrap flows have improved, industrial generation remains off by 15 to 20 percent compared with prepandemic levels.
A trader with a Midwest-based scrap processing firm says copper spreads have begun to widen as of early August, though they remained relatively consistent as the COMEX price rebounded earlier in the pandemic. He adds that was something of an anomaly as spreads typically would widen.
The trader adds, “The market came all the way back really, really fast.”
Sharp contrasts, but signs of pent-up demand
Departments - Commodities Ferrous
Scrap supplies have recovered compared with the darkest days of April, but flows are far from fully recovered.
August ferrous scrap pricing settlements led to a series of contrasts, causing recyclers with export options to experience rising prices during the early August selling period, while those farther inland saw stagnant-to-falling per ton pricing.
By the time Fastmarkets AMM monthly indexed pricing was calculated Aug. 10, average prices rose from 3 percent to 4 percent for exported scrap, while two of the three Midwest Index price averages dropped, with the No. 1 busheling grade losing 7 percent of its July value.
After several months of prompt grades being the scarcest of commodities, the return of automotive production has closed the previous COVID-19-related supply gap. This caused the No. 1 busheling grade to fall to a price not seen since November 2019.
After the July price declines, export buyers from a number of nations returned to the market to buy up scrap on both coasts. The window also was boosted by a coinciding decline in the value of the U.S. dollar, which was welcomed by many overseas traders.
Scrap supplies have recovered compared with the darkest days of April, but flows are far from fully recovered, recyclers say, signaling that any further boost in demand could very well run into a wall on the supply side.
“We have settled in to about 70 percent volumes versus pre-COVID levels and have made adjustments in headcounts and costs to make that work,” says a scrap processor on the East Coast. The 70 percent volume figure is in line with comments made by recyclers in other regions of the U.S. earlier in the summer.
As of mid-August, that 70 percent figure qualifies as a “decent flow” of scrap to the East Coast recycler, who indicates it represents a rebound from the painfully subdued volumes of the second quarter.
In his region, the boosted export demand was the predominant market factor in August. “August is challenging because two local exporters have cargoes to fill and are buying very aggressively at margins we think are too small,” he says.
While Midwest Index pricing for No. 1 busheling and shredded scrap declined in August, the $2 per ton increase in No. 1 heavy melting steel (HMS) is an indicator that domestic mills also had to compete with export buyers to obtain their monthly supply.
“Midwest domestic prices were sideways, but East Coast mills paid from $20 to $25 more per ton to compete with exporters and to replace all the scrap going to Turkey and to Asian container buyers,” the East Coast processor says.
The ongoing effects of the pandemic continue to present a cloudy picture, especially in the U.S. However, steelmakers are slowly increasing output in the near term and in the longer term are investing in more electric arc furnace (EAF) capacity.
The week ending Aug. 8, U.S. mills produced more than 1.35 million tons of steel, the American Iron and Steel Institute, Washington, says. That weekly output represents a steady march upward (and an 18 percent increase) from a COVID-19-related bottom of 1.14 million tons of output during the week ending May 2.
“We have settled in to about 70 percent volumes versus pre-COVID levels and have made adjustments in headcounts and costs to make that work.” – an East Coast scrap recycler
For the first time since the full force of COVID-19-related restrictions struck, the weekly mill capacity rate reached 60 percent. During the trough week ending May 2, the mill capacity rate fell to 51.1 percent.
The march toward additional EAF capacity, referred to in this department last month, has continued with yet more project announcements.
In mid-August, ArcelorMittal announced plans to install 1.5 million tons per year of EAF capacity in Calvert, Alabama, and Commercial Metals Co. (CMC) announced it will build a 500,000-ton-per-year EAF “micromill” adjacent to an existing one in Mesa, Arizona.
The CMC project can be considered replacement capacity for its idled EAF mill in Rancho Cucamonga, California. ArcelorMittal, however, says the slabs produced in Alabama will replace slabs that had been imported from Brazil.
Considering the difficult 2020 that steelmakers and scrap processors have been facing, the scrap sector likely is encouraged by the strong medium-to-long-term demand scenario. Scrap processors also may be asking where all the scrap will come from.
Along with American manufacturing not being fully ramped up, construction has not fully rebounded and households are showing signs of generating less scrap in the near term.
According to a study by London-based IHS Markit, the average age of light vehicles in operation in the U.S. has risen to 11.9 years, about one month older than in 2019. Underlying weaknesses in several market segments, combined with increased vehicle prices, have put upward pressure on average vehicle age.
As consumers hold on to their vehicles longer, dismantlers and shredders likely will see that much less feedstock.
Eriez, headquartered in Erie, Pennsylvania, has updated its RevX-E to require minimal maintenance. Features of the RevX-E, which are available in the ST22 and LT2 models, include:
an eccentrically mounted magnetic rotor within a nonconductive shell for the separation of nonferrous metals
a cantilevered frame that enables maintenance staff to change the belt in less than 10 minutes
large access panels all around the machine
a new hood with an adjustable splitter that allows operators to handle nonferrous materials in varying sizes
McCloskey International, Keene, Ontario, has added shredders to its range of mobile products with its Recycling Division’s debut of the VTS95, a tracked primary shredder. The VTS95:
can shred virtually any type of material and is designed for plants in which the incoming materials vary greatly in terms of size, composition and difficulty to shred
features rotating knives mounted on dual shafts that run asynchronously in both directions to prevent bridging and maximizing shredding efficiency
includes an eight-knife Samurai heavy-duty cutting table
has multiple shredding programs
comes with a Caterpillar C15 403-kilowatt (540-horsepower) Stage V/Tier 4 Final engine
Genesis Attachments, Superior, Wisconsin, has announced the release of its GDT 590, which it describes as the largest Razer demolition tool in the line that features four models. The GDT 590:
features a lighter weight design and is optimized to fit on standard and most high-reach excavators
extends the minimum excavator weight to 120,000 pounds from the 45,000-, 66,000- and 90,000-pound minimum excavator weights of the GDT 190, 290 and 390, respectively
features a 52-inch jaw opening, 46.5-inch jaw depth and 12-foot-plus reach
is designed to prevent jamming
features a short, flat-top head with bolt-on bracket engineered to simplify installation
can be customized in terms of the number and location of the crushing teeth
Seymour Padnos died at his home in Holland, Michigan, at the age of 99 July 9. At the time of his death, he was chair emeritus of Padnos, a scrap recycling company headquartered in Holland with multiple locations in Michigan and one in Indiana.
Padnos
From a young age, Seymour Padnos worked in his parent’s recycling business, which today is named Padnos. He went on to serve the company as CEO and later as chairman for more than 60 years. Serving as chair emeritus until his death, he held the Padnos company near to his heart and remained engaged with the fine details to the very end, according to an announcement about his death issued by the company. Often when he was asked what kept him going, he would respond, “The company.”
For many years during his tenure at Padnos, he served as chairman of various national committees and was a board member of the Institute of Scrap Iron & Steel, the predecessor of the Institute of Scrap Recycling Industries (ISRI), Washington. Along with his brother Stuart Padnos, Seymour Padnos expanded the family company, which has gone on to welcome the third and fourth generations of family members to the business.
“Seymour Padnos was a man of vision and saw possibility where others saw obstacles,” the announcement states. “He led the effort to establish Holland as a commercial shipping harbor back in the 1940s, sought to expand the company’s operations to work with European and Asian customers during the 1960s and ’70s and initiated a national competition focused on product design for recyclability long before the concept was popular,” the announcement continues.
Seymour Padnos received many honors and awards during his lifetime, including a Lifetime Achievement Award from ISRI in 2014. He also received an Honorary Doctorate of Humane Letters from Grand Valley State University (GVSU), Grand Rapids, Michigan.
In the 1950s, he and Stuart Padnos established the Louis and Helen Padnos Foundation to honor their parents by giving back to the community.
Additionally, with his wife, he established the Esther and Seymour Padnos Foundation and was an early supporter of local institutions of higher education, which led to their donation to create the Padnos College of Engineering and Computing and the Padnos Hall of Science at GVSU.
Industrial Magnetics Inc. appoints regional manager
Evans
Boyne City, Michigan-based Industrial Magnetics Inc. (IMI), a manufacturer of magnetic products and systems for industrial applications, has announced the appointment of Aaron Evans as regional manager for the company’s western U.S. territory, which includes Arizona, Utah, central and Southern California and southern Nevada.
According to IMI, Evans has an extensive background in industrial distribution, including 15 years as an account manager with Kaman Distribution. He also has held management positions at various hydraulic and power transmission distributors and completed a number of factory trainings and certifications with companies such as Baldor Electric Motor, Timken Bearings and Drives Chain and The Belting Association.
“Until Aaron came on board, we had mostly managed the western USA from our [headquarters] in Michigan,” says Dennis O’Leary, chief business development officer at IMI. “We’re excited that our customers and channel partners there can now enjoy the benefit of face-to-face interaction with an IMI regional manager.
“We believe it’s what sets us apart from many other manufacturers in our space: an in-field regional manager working in concert with everyone in the chain to effectively deliver unique solutions,” O’Leary adds.
IMI designs and manufactures permanent magnetic and electromagnetic devices to meet its customers’ specific requirements in magnetic separation, material handling, work-holding and automated or robotic applications.
Call2Recycle president to retire
Carl Smith, president and CEO of Atlanta-based Call2Recycle, has announced plans to retire in 2021. Call2Recycle is a battery-manufacturer-led national stewardship organization.
Smith has served with Call2Recycle for 10 years.
“We look forward to celebrating Carl’s significant contributions to Call2Recycle and appreciate his ongoing stewardship while the board embarks on a national search to identify his successor,” Call2Recycle says of Smith’s retirement.
Call2Recycle’s board of directors has retained Koya Leadership Partners, an executive search firm, to lead the national recruitment for Call2Recycle’s next CEO and president. Individuals interested in the position can contact the Koya team at call2recycle@koyapartners.com.
Auto recyclers stay roadworthy
Features - Automotive Recycling
Decreased activity has affected auto salvage sector revenue, but some trends seem to be working in the industry’s favor.
When Americans take fewer trips and drive fewer miles, it inevitably has an impact on the supply of salvaged vehicles and demand for replacement parts and components. That means COVID-19, the pandemic caused by the novel coronavirus, has affected the automotive salvage and recycled parts business as it has nearly every other aspect of life in 2020.
The second-quarter 2020 financial results of one of America’s largest automotive recycling firms, Chicago-based LKQ Corp., demonstrate the pandemic-related challenges facing the sector but also include bright spots pointing to its resilience.
Sandy Blalock, executive director of the Automotive Recyclers Association (ARA), Manassas, Virginia, says some ARA member companies are struggling because of the economic slowdown, but the sector’s early recognition as an essential business has set the tone for most companies to work their way through the difficult conditions.
Less bang, fewer bucks
It is an unfortunate aspect of the auto recycling business that a percentage of its inventory stems from auto accidents that result in insurance companies declaring one or more vehicles involved as having been completely written off, or totaled.
Among the many aspects of Americans staying home from work and vacation in 2020, “Less people on the road has resulted in fewer accidents and less inventory at the salvage pools for automotive recyclers to purchase,” Blalock tells Recycling Today.
The fairly sudden lack of supply in the second quarter of 2020 meant “prices for salvage have increased due to that lack of inventory,” Blalock adds. “Many of our members experienced strong sales, as those individuals who needed to be on the road during the last few months of the pandemic really needed reliable vehicles, and ARA is proud that having access to safe, quality recycled OEM (original equipment manufacturers) parts helped make that happen.
“Some automotive recyclers are reporting strong sales; however, many of our members are struggling to cope,” Blalock says. “It really is depending on the local market, local impact the virus has had there and any related local government restrictions.”
Publicly traded LKQ, which has more than 550 locations in the United States, says its second-quarter 2020 revenue fell by 19.1 percent compared with the second quarter of 2019. The company says, however, it “implemented targeted cost actions” to achieve net income of $119 million. Although that was down 21.2 percent compared with the year-ago quarter, LKQ remained profitable.
Remaining active and profitable as the U.S. continues to navigate COVID-19 and the resulting downturn will remain a critical day-to-day focus for LKQ and other ARA member companies.
Blalock says ARA initially concentrated on helping its members enact safe and healthy operating procedures. “From the onset of the pandemic, ARA launched daily ‘COVID-19 Update’ email blasts to keep members informed of all news, state and federal regulatory guidance, health information and other resources that could impact member businesses,” she says.
“COVID-19 resources have been added to the ARA University curriculum and will be a topic of multiple educational sessions at the 77th Annual ARA Convention this fall,” Blalock says, referring to the association’s annual gathering, a “virtual” event scheduled for Nov. 11-14.
When the auto recyclers gather online, they will have issues beyond COVID-19 to discuss as the sector makes plans for the remainder of this decade.
Original and acceptable
In April, the ARA issued a press release expressing “extreme concern” that Subaru of America Inc. had included guidance to its dealers stating that it “does not support the use of parts that have been removed, salvaged or recycled from an existing vehicle.”
ARA and its members have been down this road with other automakers in the past, and in its statement of concern, ARA states that the position taken by Subaru is in violation of the federal Magnuson-Moss Warranty Act by saying the use of recycled components could negate its warranty.
“The Federal Trade Commission (FTC) expressly states that ‘simply using an aftermarket or recycled part does not void your warranty,’” the ARA states in an April news release, citing an FTC Consumer Information memo titled “Auto Warranties and Routine Maintenance,” dated May 2015.
Blalock says being on the lookout for manufacturer guidelines, such as the one attempted by Subaru, is one of ARA’s core missions. “ARA actively tracks all state and federal legislative activity that positively or negatively impacts the recycled original equipment (ROE) parts market and ARA member businesses,” she comments.
“Any proposed legislation that could explicitly limit consumer choice when it comes to sourcing replacement parts for their vehicle, or limit consumer choice as an unintended consequence, is something that ARA is on the lookout for daily,” she says. “In the coming year, ARA will be leveraging its growing social media presence to change some of the public misconceptions out there about recycled automotive parts—misconceptions in many cases promulgated by the auto manufacturers.”
The ROE designation Blalock cites is part of a wider ARA effort to increase the visibility of recycled automotive parts in the vehicle repair and maintenance supply chain, as designated in a strategic plan recently updated and adopted by the association.
A favorable choice
In addition to the updated strategic plan the ARA adopted earlier this year, Blalock says in 2018 the association launched a public awareness campaign titled “Choose Recycled Parts.”
Visitors to a website touting the benefits of parts supplied by the auto salvage industry can read about the quality and environmental benefits of using such components. “By choosing recycled auto parts, you help preserve natural resources, reduce air and water pollution and divert material from landfills,” the ARA says.
Earlier this year, the ARA trademarked the term Recycled Original Equipment, and Blalock says the organization will update its Choose Recycled Parts website and other campaign materials to use the new term.
The use of the ROE term is part of a larger effort pertaining to branding or raising the profile of the auto salvage and recycling sector. The ARA says its strategic plan “is grounded in the association’s mission to advance the automotive recycling industry and promote its beneficial effects on society.”
Blalock adds, “We have some exciting things in production that we think will help put a new spin on ROE parts.”
Those efforts include taking steps along with automotive recycling organizations from around the world to designate Sept. 18 as World Vehicle Recycling Day.
On the financial side, Dominick Zarcone, president and CEO of LKQ Corp., says, “While the company’s second-quarter performance exceeded our expectations at the beginning of the quarter, there remains a high degree of uncertainty about the ongoing rate and shape of the COVID-19 recovery.”
The ARA’s wider membership sees much of the same thing, Blalock and current ARA Acting President Scott Robertson of Robertson’s Auto Salvage Inc., Wareham, Massachusetts, say.
Commenting on the release of ARA’s strategic plan in late July, Robertson says, “2020 has been a game-changer. During these challenging times, and given the unprecedented impact that a global pandemic is having on all businesses and industries, the direction outlined in this strategic plan will help ARA continue to move forward.”
Before longer range strategic plans are implemented, Blalock says auto recycling business owners will keep a close eye on revenue and expenses—and employee and customer safety.
“Automotive recyclers have incorporated the standard COVID-19 safety measures into their business operations, meaning taking steps to ensure social distancing, face coverings, hand sanitizer and so on,” she comments. “Many have gone beyond this and changed the way they interact with customers, such as employing drive-through windows and an increased focus on electronic commerce and enhanced delivery services rather than face-to-face [transactions].”
The author is senior editor with Recycling Today and can be contacted by email at btaylor@gie.net.
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Brian Taylor
