Like with many commodities, copper scrap markets have experienced downturns in supply and demand this year in response to COVID-19 and corresponding downturns in global manufacturing. 

According to London Metal Exchange (LME) data, primary copper prices are down about 14 percent this month compared with the end of 2019, while primary tin prices are down 10 percent and primary aluminum prices are down 18 percent compared with the end of 2019. 

Copper scrap prices have declined in recent months as well, according to indexes produced by the Bureau of Labor Statistics. In February, copper scrap prices declined 5.2 percent from the previous month; in March prices declined 7.8 percent from February; and in April prices slid 3.1 percent compared with March. 

“For year to date April 2020 compared with April 2019, copper-based scrap prices are down more than 21 percent,” said Joe Pickard, chief economist and director of commodities at the Washington-based Institute of Scrap Recycling Industries, during a webinar May 20.

Based on assumptions from April, Pickard said John Dunham & Associates Inc., Brooklyn, New York, calculated that the COVID-19 pandemic would lead to a decrease in about 9,000 jobs in the nonferrous recycling space and a decrease of about $2.2 billion, not including supplier impact. 

Pickard shared these figures to kick off the association’s webinar titled Spotlight on Copper. Other speakers included Edward Meir, an industry analyst at ED&F Man Capital Markets, Darien, Connecticut, and Uwe Schmidt, chief commercial officer at Montanwerke Brixlegg AG, Brixlegg, Austria. Presenters shared supply-and-demand trends and outlooks for copper and copper scrap this year.

Export markets

Export markets have shifted over the last five years for copper scrap. In 2015, Pickard said China accounted for 69 percent of total copper and copper alloy scrap exports from the U.S. For the first quarter of 2020, China only accounted for 8 percent of copper and copper alloy scrap exports from the U.S. “Malaysia, Canada, South Korea and India all accounted for a larger share of export demand than mainland China alone,” he said, adding that other nations are taking China’s place as growth markets for copper scrap exports. “Those growth markets for copper scrap this year include South Korea, India, Germany, Taiwan, Belgium and Vietnam.” 

“[China] wants to become a bit more self-sufficient,” Meir said of that country's decreased copper scrap import demand. “In sourcing scrap, they want to encourage all these smelters ramping up, and many of them are new operators, so they want to buy more concentrates; they want to source more domestic scrap themselves.”

Also, a good deal of scrap is moving to China through conduits, he said. Malaysia may have “exploded” in terms of the amount of copper scrap it imports—the U.S. exported 600 tons of copper scrap to Malaysia in 2015, whereas it exported 220,000 tons in 2019—but much of the scrap going to Malaysia is being reprocessed and sent to China.

Meir added that China has heightened the purity of copper that it will accept. China plans to reclassify higher quality scrap, which will not be subject to import quotas, July 1. “Although the volumes are down, the copper purity of what they’re getting in is record high at about 90 percent,” Meir said. “So, they’re making up for it in a way by getting better quality copper scrap.”

European perspective

During the webinar, Schmidt of Montanwerke offered a European outlook on copper scrap. He said his company, which is based in Austria, uses scrap exclusively and is expected to produce about 130,000 tons of cathodes this year. He added that his firm is the smallest refinery in Europe since Aurubis announced plans to purchase Metallo. That merger will be completed May 29.  

Although Schmidt said he and his firm were initially concerned about the Aurubis-Metallo merger and how it would affect competition, as the merged company will have two-thirds of all European capacity, he said he sees some advantages and disadvantages for Montanwerke.

“Our big disadvantage [is] we have a giant competitor,” Schmidt said. “But it’s not our biggest competitor. The big competitor in the market is China. If China is in the market, we do not have a chance to buy. But our location in the Alps region of Austria is somehow an advantage because the scrap dealers and scrap yards in our neighborhood prefer to sell domestic to us before they ship to China due to freight.”

In Europe, Schmidt added that markets were strong for the first four months of 2020. “From January to April, we couldn’t complain,” he said. But since then, scrap supplies have become tighter and a supply shortage has emerged in Europe. Schmidt cited COVID-19-related lockdowns as the No. 1 reason for supply shortages in recent months as the automotive sector shut down; however, infrastructure markets were a little more stable. 

In addition, he said declining scrap prices have intensified scrap shortages in Europe. “We trade LME, and copper was really down,” Schmidt said. “Usually scrap dealers in Europe do not hedge, so they saw prices go down. We recognized that our major suppliers could not buy from their suppliers because it was impossible for them to release material without getting into losses.”

Schmidt predicted the scrap shortage likely will continue into June and July.

Third, he said, scrap supply is short in Europe due to China. He said China has bought a bit more aggressively in Europe in recent months. 

Carpenter Metal Solutions Inc., Alliance, Ohio, has expanded its staff with the addition of a vice president of ferrous metals and a commercial scrap buyer.

 

Jerry Hickman has joined the Carpenter Metal Solutions team as its vice president of ferrous metals.  Hickman began his career in scrap metal recycling in July 2005 at Youngstown Iron and Metal as director of marketing and business development. He would later join The Timken Co. in 2008 to build a scrap management business to control internally generated scrap metal byproducts. He will oversee the ferrous division as well as develop Carpenter Metal Solutions' interdivisional “Total-Source” recycling initiative to national accounts.

 

Additionally, Jason Pihlblad has joined the company as a commercial scrap buyer. In 2004 Pihlblad began his career in the recycling industry at Annaco Metallica, spending the next 12 years learning all aspects of the recycling industry. During that time, he built strong relationships throughout the industry, according to Carpenter Metal Solutions. Following that stint, Pihlblad worked with two local recyclers, building their industrial base, including specialty and high-temperature alloys, across North America.  He will manage Carpenter Metal Solutions’ Industrial and commercial development and assist in the development of national accounts.

Carpenter Metal Solutions has locations in Alliance and in Fort Payne, Alabama. The company offers scrap management programs for commercial generators as well as capital equipment financing and leasing.

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced May 19 that it has adopted revised policies for enforcing its requirements with respect to the coronavirus as economies reopen in states throughout the country.

Throughout the course of the pandemic, understanding about the transmission and prevention of infection has improved as the government and the private sector have taken measures to slow the virus’s spread, protect employees and adapt to new ways of doing business, OSHA says.

Now, as states begin reopening their economies, OSHA has issued two revised enforcement policies to ensure employers are taking action to protect their employees.

First, OSHA is increasing in-person inspections at many workplaces. The new enforcement guidance reflects changing circumstances in which many non-critical businesses have begun to reopen in areas of lower community spread. The risk of transmission is lower in specific categories of workplaces, and personal protective equipment potentially needed for inspections is more widely available. OSHA staff will continue to prioritize COVID-19 inspections and will use all enforcement tools as OSHA has historically done, the organization says.

Second, OSHA is revising its previous enforcement policy for recording cases of coronavirus. Under OSHA’s recordkeeping requirements, coronavirus is a recordable illness, and employers are responsible for recording cases of the coronavirus, if the case:

• is confirmed as a coronavirus illness;
• is work-related as defined by 29 CFR 1904.5; and
• involves one or more of the general recording criteria in 29 CFR 1904.7, such as medical treatment beyond first aid or days away from work.

Under the new policy, OSHA will enforce the recordkeeping requirements of 29 CFR 1904 for employee coronavirus illnesses for all employers. Given the nature of the disease and community spread, however, in many instances, it remains difficult to determine whether a coronavirus illness is work-related, especially when an employee has experienced potential exposure both in and out of the workplace. OSHA’s guidance emphasizes that employers must make reasonable efforts, based on the evidence available to the employer, to ascertain whether a particular case of coronavirus is work-related.

Recording a coronavirus illness does not mean that the employer has violated any OSHA standard, OSHA says. Following existing regulations, employers with 10 or fewer employees and certain employers in low-hazard industries have no recording obligations—they need only report work-related coronavirus illnesses that result in a fatality or an employee’s in-patient hospitalization, amputation or loss of an eye.

AF&PA

In late April, the American Forest & Paper Association (AF&PA), Washington, reported that U.S. tissue mills set record-high levels of tissue production this spring. U.S. mills manufactured about 700,000 tons of tissue in March alone. In February and March, AF&PA reports that its member companies delivered more than 22,000 tons of parent roll tissue per day. These increases likely were spurred by the COVID-19 pandemic.

“As daily production reached new thresholds, AF&PA member companies stayed the course, delivering sustainable tissue products to meet everyday, essential needs,” says Heidi Brock, president and CEO of AF&PA. “I am heartened by the industry’s commitment to safety, and its ability to move products to the global market—just as we do 52 weeks each year.”

The pulp and paper industry has experienced an unforeseen surge in demand this spring. Recycling Today followed up with Brock at AF&PA to learn more about how this is affecting demand for recovered fiber. 

Recycling Today (RT): Tissue production is way up this spring—what does that mean for AF&PA member companies? What stories have you heard from the industry on how it’s handling the increased demand?

Heidi Brock (HB): First and foremost, our member companies are laser-focused on the health and safety of the workforce. Now, with that as the backdrop, I will say that AF&PA members in this segment are working around the clock, running extra shifts, putting idled equipment back into service and finding new ways to get products to consumers to meet demand—all while remaining steadfast to their company commitment and our industry priority to workplace safety. 

I am so heartened to hear and read about the extraordinary actions of so many people in our industry right now. From moving experts around the country—and safely home again—in order to increase the production of much-needed products to manufacturing personal protective equipment both for our industry employees as well as first responders—our member companies and their employees are meeting this challenge head-on in ways that make us all proud. 

As a leader from one member company said, “There’s a sense of pride of being able to deliver that thing that’s so needed right now.” It is therefore vital that the critical supply chains our members rely on to make those products continue, and AF&PA has engaged policymakers to help ensure that is the case.

RT: What does the increased tissue production mean for recovered fiber use?

HB: Nationwide, more than a third of the paper industry’s total fiber requirements are met using recovered material. That works out to more than 32 million tons of recovered fiber consumed by U.S. paper and paperboard manufacturers in 2019. Recovered fiber is an important raw material for many tissue products. 

In 2019, 56 percent of total tissue production came from paper that was recovered for recycling. Our recovered fiber supply and our ability to continue to produce essential tissue, packaging and other paper-based products, in part, relies on communities to provide a safe environment for workers, following leading guidance from authorities, like the CDC (Centers for Disease Control and Prevention), to collect and process residential curbside recycling materials.

RT: How can recycling businesses be helping paper mill companies during the pandemic?

HB: The words that I keep hearing many people say repeatedly are: “We’re all in this together.” In the days, weeks and months ahead, we’ll need to advocate for issues together. As an example, AF&PA is communicating to mayors across the country that recycling is essential to our fiber supply—and it’s also essential to produce tissue, packaging and other paper-based products. We need industry partners to echo this message.

RT: How is AF&PA working with its members during the pandemic?

HB: I would offer a few observations: First, it has become essential to communicate and provide timely and accurate information in as complete a manner as possible, whether that’s to members, or with industry partners, key stakeholders and policymakers. AF&PA staff worked quickly to compile and provide resources online. For the latest information on state or federal policies impacting our members, as well as the latest research and guidance of interest to members, we encourage members and stakeholders to visit our website at www.afandpa.org. 

Second, our committees have been very active over the past months as we develop policy positions and input into the government on how the crisis is impacting our supply chain. That conversation with members is the first critical step, but I also think we are finding new ways to work together. Part of my job has been reaching out to members to ensure the work AF&PA is doing is going to add value to their business. Finally, like many organizations, AF&PA has become proficient with videoconferencing to engage our members. We’re also finding ways to show gratitude for the hard work our industry workforce has been doing. Recently, we created a YouTube “thank you” video that spotlights the men and women on the front lines of the paper and wood products industry right now. It feels like now more than ever we need to recognize the personal effort that goes into the creation of our essential products. 

RT: In addition to COVID-19, are there any other challenges the pulp and paper industry is facing?

HB: As an opportunity, I would say the paper industry has some of the most comprehensive and quantifiable sustainability goals of any U.S. manufacturing industry thanks to our Better Practices, Better Planet 2020 initiative. Sustainable practices have been the foundation of our industry, and they will continue to guide us forward through this decade. As challenges related to waste continue to be discussed both at the national and local levels, we will be there asking elected officials to recognize paper as part of the circular solution. These policy conversations will strengthen our industry’s ability to provide consumers with recyclable, renewable and sustainable paper products for years to come.

RT: What lessons have you learned from the pandemic that have helped you to better lead the organization?

HB: I came into this role in September, but I think right now this job, and the job for all of us, is much different than ever before. This crisis underscores the need to know your values as you navigate the unknown. Also, how to act and think in a nimble fashion, and to communicate frequently and personally while reflecting on what form of communication will be most effective—is it a virtual meeting or a phone call? 

If there’s a simple truth that I’ve learned, it’s that taking on coordinated and collective action for AF&PA requires an ability to listen, build consensus, and be open to new ideas or ways of thinking. For instance, the COVID-19 pandemic has redefined what it means for a supply chain to be essential. And that designation has made the difference to many businesses and jobs in whether they were able to operate during the early days of this crisis. 

At AF&PA, we worked with partner organizations across the forest products and recycling supply chain to help tell the story of how so many depend on our sector. And, with that kind of recognition by federal and state leaders comes great responsibility. I am proud that our industry has really leveraged past experience in prioritizing the safety of its workforce. I have also learned that while our external environment may have changed dramatically, the core values of our industry have not. Core values around worker safety and sustainability have united our industry for many years and will now serve as a foundation for successfully navigating our way to the ‘other side’ of this crisis.