In summer, box demand was very robust in the United States, while inventories were low at containerboard mills. In response, domestic containerboard mills were very hungry for recovered paper—particularly old corrugated containers (OCC) and mixed paper.
This demand pushed domestic OCC and mixed paper prices up consistently over the summer months, and many mills were willing to pay high premiums to secure fiber. Some recyclers told Recycling Today in August that domestic mills were purchasing tons from across the U.S. to shore up their inventories.
As of October, many mills appear to have satiated their appetites for recovered paper. Inventory levels are much better at mills. Domestic OCC and mixed paper prices seem to have stabilized, and far fewer mills are panic buying.
Despite this stabilization, demand for recovered paper remains strong in October.
“Movement has been good,” a broker based in the South says. “I haven’t seen weakness in the market, but I haven’t received phone calls asking for more. It’s truly a balanced and strong market right now.”
“I haven’t seen weakness in the market, but I haven’t received phone calls asking for more. It’s truly a balanced and strong market right now.”– a broker based in the South
A recycler based in the South says many mills that he works with are still running very strong. However, he adds that some mills began to take downtime in October to maintain equipment.
For much of this year, demand and pricing for sorted office paper (SOP) have been on the softer side in part because of reduced demand for away-from-home tissue products. But, as more businesses open up, demand for away-from-home tissue products is improving, boosting demand and pricing for SOP. In the October buying period, prices for this grade increased in most regions of the U.S., according to Fastmarkets RISI’s PPI Pulp & Paper Week Oct. 5 report.
A contact with a document destruction company based on the East Coast says SOP markets have been “strong” only since July.
“In 2019, 2020 and the first half of 2021, the market was depressed,” he says. “In May and June, we were still below the 10-year-average price for paper. We went over that average in July, so we’re now in our fourth month of making a little extra money.”
Although SOP prices and demand are up, many document destruction firms have experienced lower generation since the onset of the pandemic. They say generation was down in 2020 and has increased this year, though not to prepandemic levels just yet.
“It would be really nice if we had strong volumes plus this higher paper pricing,” a contact with a document destruction firm on the West Coast says, noting that commercial generation remains soft.
Export markets have been especially quiet lately. The broker based in the South says Mexico is one of the only “feasible” export destinations this fall. “For India, Taiwan and Southeast Asia, our prices are too high for them, and they pulled back. Domestic mills rose to the occasion to fight off any export market, so export markets are dead.”
A broker based on the East Coast says export activity has been slow in October, adding that it’s been a while since that has been the case.
“I call every night overseas, and it’s hard for me to get new orders,” he continues. “The price [of recovered paper] is very high, and space is very tight [on container ships], so mills in Indonesia, Thailand and Taiwan are all very quiet. They are trying to wait and see if prices drop.”
The East Coast broker says export prices for recovered paper are slightly lower than domestic prices because of the lack of demand overseas. He adds that some mills also might be waiting to see whether ocean freight rates stabilize or decrease because they have risen steadily this year.
Recyclers and brokers say transportation has remained challenging this fall. The recycler based in the South says fuel costs and trucking rates have increased dramatically in the last year.
“I used to be able to ship from Houston to Atlanta, where the trucking rate was $1,500. Now, it’s $2,400,” he says. The broker based in the South adds that he’s grateful his company handles much of its trucking internally. “If you rely on third-party carriers, you’re going to get gouged on pricing.”
With high trucking costs, he adds that paper mills are trying to buy materials from closer distances than they have in the past.
Maintaining the flow
Departments - Commodities Nonferrous
Despite transportation-related challenges, nonferrous scrap movement remained strong in October.
Nonferrous scrap is flowing well as of mid-October, despite the transportation-related issues that continue to affect supply chains in the U.S. and globally.
“In general, demand is still really good,” says a marketing executive with a scrap processing company that handles postindustrial material at multiple locations in the Midwest and Southeast.
He says spreads have remained consistent for aluminum extrusions and other rolling mill grades in recent months. However, spreads have widened for painted siding and other secondary grades, the marketing executive says, and demand has strengthened as well.
“On the secondary side, things were kind of quiet,” he continues. “And now it appears like pricing is a little bit more attractive.”
A vice president of marketing and trading with another multilocation scrap processor based in the Midwest says the rising price of the common alloy A380 has brought up scrap prices on the secondary side. “We can sell our secondary aluminum, and right now prices are pretty decent.”
“For the right price, anything can move. But the wrong price can kill a deal pretty quickly.” – Todd Safran of Safran Metals, Chicago
Joel Fogel, executive vice president of nonferrous for Cohen, Middletown, Ohio, also mentions the widening of spreads for common alloy material, such as mixed low-copper clips and siding. He also notes increased export interest in this material. “That’s a different dynamic,” Fogel says. “I don’t know that we’ve seen global competitiveness as it relates to the domestic number on the aluminum side for several years.”
The marketing executive says export demand for aluminum pucks and turnings is “pretty healthy” and pricing is good.
“We’ve been pretty attentive to our export business recently,” he says, noting that transportation bottlenecks require close monitoring. “We’ve been keeping close contact with transportation and operations. Last week, everything that was scheduled to ship shipped on time. We thought we turned a corner,” he says in mid-October. “Today, not a single one of three export loads shipped because we could not get containers.”
While Fogel says aluminum scrap is moving well, some primary mills are pushing out deliveries. “You can’t really sell and ship in the same month.”
The marketing executive says he sees demand remaining strong through year-end, with “no signs of things slowing down.”
Demand and pricing also remain strong for red metals.
“The market ran up quite a bit since the middle of last week, and spreads haven’t widened, and that tells you something,” the vice president with the Midwest-based scrap company says in mid-October. “It’s an indicator of strong demand.”
“As it relates to copper, spreads haven’t moved very much as the market’s gone up,” Fogel says, adding that he thinks things will become more competitive on the copper side. He says there are announcements of new melting capacity in the U.S.
Fogel says, “I think there will be more demand for secondary type copper in the United States that hasn't existed.” He adds that this increased demand should work to narrow or maintain spreads.
According to Davis Index, spreads did begin to widen Oct. 19, when Comex copper closed at $4.71 per pound, an increase of 39 cents per pound from Oct. 12. The news and pricing service adds that many market participants expect the Comex copper price to reach $5 per pound before the end of October.
While Todd Safran of Safran Metals in Chicago says red metal scrap is flowing well, the high prices have some consumers sitting on the sidelines. Some need prompt deliveries, while a few others are one to two months out, he adds.
The vice president with the Midwest-based scrap firm says domestic and export demand for red metal scrap remains strong. Because of the supply chain issues, he says, “No consumer wants to lose much scrap.”
Cost-effective trucking is difficult to come by, Safran says. “For the right price, anything can move. But the wrong price can kill a deal pretty quickly.”
The potential for a very good year
Departments - Commodities Ferrous
U.S. ferrous scrap processors and traders expect positive momentum to start the fourth quarter of the year.
Domestic and global demand for ferrous scrap generated in the United States helped the average early October selling price for obsolete grades bounce back from a mild September slump. The positive momentum to start the fourth quarter raises the prospects that ferrous scrap processors and traders will look back fondly on the calendar year.
Although the value of prime ferrous scrap dropped for the second consecutive month in October, according to Fastmarkets AMM surveys, the rebound in obsolete grades provides good news for shredder operators and other processors.
Adding to optimism were reports in the metals trade press in the second week of October that mills from Turkey had swooped back into the bulk cargo market. The $440 to $450 prices assigned to these transactions point to a rebound in the East Coast export market after a slow late-summer period.
West Coast prices held relatively firm in September and October. “Demand overseas is strong for us, so we’re having a good summer and year,” a West Coast processor and exporter tells Recycling Today.
“Demand overseas is strong for us, so we’re having a good summer and year.” — a West Coast scrap processor
On the supply side, the same processor says material flow has been good.
That echoes sentiment in most other parts of the country. Scale pricing has been on an upward trend throughout 2021 providing steady over-the-scale traffic this year.
The market for prime grades has been trending $100 to as much as $150 per ton higher compared with obsolete grades throughout the year. The October drop in prime grades was one of the first cases all year when obsolete grades showed positive momentum, while prime grade pricing dropped.
An acquisition in the second week of October will be watched closely by generators and buyers of prime ferrous scrap. When Cleveland-Cliffs announced its acquisition of Detroit-based Ferrous Processing & Trading (FPT), its CEO pointed to FPT’s prime grades market share.
“FPT has a very meaningful presence in prime scrap, [and] with all the new flat-rolled EAF [electric arc furnace] capacity coming online in our market over the next four years, prime scrap will only become more and more scarce,” Lourenco Goncalves, chair, CEO and president of Cleveland-Cliffs, says.
Cleveland-Cliffs has more basic oxygen furnace (BOF) capacity compared with EAF capacity. Those furnaces are less reliant on scrap as a feedstock. How the BOF steelmaker offers its scrap to the market will be closely watched by the scrap and steel sectors in the U.S. In the initial announcement, Goncalves portrays a closed loop process in which prime scrap collected by FPT would then be directed to mills operated by Cleveland-Cliffs.
Goncalves adds, “The acquisition of FPT will enhance our ability to buy back prime scrap directly from our clients, cutting the middlemen and improving the margin contribution from scrap for both Cleveland-Cliffs and for the manufacturing and service center clients that will be able to sell scrap directly back to us.”
Mill operators and scrap processors continue to enjoy a 2021 economy that features steady demand for finished steel and equally strong demand for scrap and other iron-based metallic units used in furnaces.
Portland, Oregon-based Schnitzer Steel Industries Inc. says it expects net income in the range of $43 million to $45 million in its fiscal 2021 fourth quarter, which ended Aug. 31, 2021. That figure is below the more than $60 million in net income earned in the previous quarter, but the company says favorable market conditions continue to generate profits.
Favorable domestic market conditions are being matched by economic growth in nations that accept U.S. scrap imports. The Turkish steel sector seems to have overcome earlier jitters tied to that nation’s fiscal policies and currency weakness.
The Indian subcontinent (as represented by India and its neighbors Bangladesh and Pakistan) is buying U.S. ferrous scrap at the same pace it did last year, helping demand meet or exceed supply in coastal regions of the U.S.
Statistics gathered by the U.S. Census Bureau and aggregated by the U.S. Geological Survey show ferrous scrap trade between the U.S. and the Indian subcontinent remains vigorous. The volume of ferrous scrap exported from the U.S. to India, Bangladesh and Pakistan (combined) has been nearly identical in the first half of 2021 compared with the first six months of 2020. Approximately 1.265 million metric tons were shipped in both time frames.
Bangladesh is the biggest buyer in the ferrous sector, having purchased 622,000 metric tons, or 49 percent, of the total. India was next, at 332,000 metric tons (26 percent), followed by Pakistan, which received 311,000 metric tons (24.5 percent).
EFS-plastics Inc., a postconsumer plastic recycler based in Listowel, Ontario, has acquired Ontario-based Exi-Plast Custom Moulding, a plastic manufacturer with a focus on custom blow molding services. EFS-plastics focuses on producing high-quality postconsumer polyethylene and polypropylene resin from household collected recyclables.
According to EFS-plastics, the acquisition will increase the market strength and stability of both organizations, which provide more than 110 jobs in Huron and Perth counties in Ontario. EFS-plastics says both companies will continue to operate under their organizational structures and will build on their existing base of suppliers and customers.
EFS-plastics President and CEO Martin Vogt says the companies will operate as “separate business units, retaining their organizational structures.” He adds, “Through its joint venture partnership with Inteplast Group, EFS-plastics looks forward to supporting Exi-Plast as it grows its business.”
EFS-plastics did not disclose any additional terms of the transaction.
“Having worked closely with EFS as a supplier since 2016, it felt natural for Exi-Plast to join the EFS group of companies,” says Exi-Plast President Jeffrey Lang. “With EFS’ backing, we are looking forward to increasing our production capacity and upgrading equipment over the next several months.”
EFS-plastics reports that the acquisition fits into its mission to reduce plastic waste by replacing the use of virgin plastic with high-quality, low-carbon recycled plastic. By purchasing Exi-Plast, EFS can manufacture finished products with high levels of postconsumer recycled plastics for its consumers.
“Our investment in Exi-Plast will increase our ability to serve customers looking to improve their environmental footprint,” Vogt says. “As we closely watch action being taken by both the federal government and the private sector, we see the increasing demand for recycled content as a lasting trend.”
PreZero expands its presence in South Carolina
PreZero US Inc., headquartered in Los Angeles, says it plans to invest $11.5 million in a facility in Westminster, South Carolina, that will have the capacity to process 40,000 tons of plastic scrap per year.
PreZero US tells Recycling Today that the Westminster facility was once owned by ACI Plastics, which had been one of the company’s strategic partners. PreZero US says it will no longer be in partnership with ACI Plastics and that it is investing to improve the facility to meet its production goals.
The facility will feature equipment to process plastic scrap into high-quality recycled resins. PreZero US is renovating and refitting the facility with new equipment to accommodate additional lines to meet the growing demand among U.S. manufacturers for postconsumer recycled content.
In its first two phases of development, PreZero US plans to process polyethylene, polypropylene and low-density polyethylene at the Westminster facility. The company says it will consider adding processing lines for additional materials in the future, depending on business needs.
According to a news release from the South Carolina governor’s website, PreZero plans to source mixed rigid plastics from material recovery facilities in the region as well as flexible packaging from businesses, such as warehouses and distribution centers. The expansion is expected to be completed by the fall of 2023 and will add 32 jobs to the area.
PreZero US has had a presence in the Oconee County area of South Carolina since 2019. The company says, “As we have integrated into the community, we have come to see the value in developing here as we look to have a presence and service every major region in the U.S.”
Hernan de la Vega, chief executive officer of PreZero, says, “We have been operational since 2019, and this is only the beginning. We have made significant investments into the region, and we are happy to provide stable, long-term employment opportunities for the surrounding community that will allow us to grow together.”
Charlotte, North Carolina-based Nucor Corp. announced in mid-September that it will build a 3-million-ton-per-year electric arc furnace (EAF) steel mill in one of three states. The announcement came shortly after United States Steel Corp. announced its intention to install EAF capacity on a similar scale in the Southeast. (See “US Steel searches for new EAF mill site” below.)
Nucor says its board of directors approved the construction of what it calls a state-of-the-art sheet mill and that the company is “evaluating locations in Ohio, Pennsylvania and West Virginia.”
The company adds, “The new mill will be geographically situated to serve customers in the Midwest and Northeast markets and will have a significantly lower carbon footprint than nearby competitors.”
“This greenfield sheet mill complements Nucor’s existing operations, allowing us to more effectively service customers in the region and grow our core business while creating substantial value for our shareholders,” says Leon Topalian, Nucor president and CEO. “This mill will allow us to competitively meet the growing need that many of our customers, particularly in the automotive market, have for high-quality steel with a lower carbon footprint,” he adds.
The new mill is expected to cost approximately $2.7 billion and to produce hot-rolled sheet products, with downstream processing including a tandem cold mill, annealing capabilities and two galvanizing lines.
Nucor predominantly uses scrap metal to feed its furnaces, though the firm also produces direct reduced iron at a plant in Louisiana.
Once a site has been selected and permitting and other regulatory approvals have been received, Nucor says it expects construction to take two years.
Topalian says, “The green and digital economy is being built with steel, and Nucor, as one of the cleanest steelmakers in the world, is poised to be able to meet these unique opportunities.”
DJJ adds Garden Street, Grossman sites to portfolio
The David J. Joseph Co. (DJJ) subsidiary of Charlotte, North Carolina-based electric arc furnace (EAF) steelmaker Nucor Corp. has announced two acquisitions that will add to its scrap shredding and processing capacity.
St. Louis-based Grossman Iron & Steel, a 101-year-old scrap processing company, has been acquired by the Advantage Metals Recycling (AMR) DJJ operating unit. The acquisition brings AMR’s number of recycling facilities to 12, according to the company.
“We are pleased to welcome the Grossman teammates to the AMR/ Nucor family,” says Mark Schaefer, an AMR vice president and general manager. He calls Grossman “well-positioned to support our growing steelmaking capacity along the Mississippi and Ohio river system.”
Additionally, the Trademark Metals Recycling LLC (TMR) business unit of DJJ has agreed to purchase the assets of Garden Street Iron & Metal Inc. in Fort Myers, Florida. That transaction will bring TMR’s total number of recycling facilities to 26, according to Cincinnati-based DJJ.
Brian Phillippi, who is the general manager of TMR, says, “The Garden Street teammates are a welcome addition to the TMR/Nucor team and will seamlessly add to our strong presence in the Florida market.”
Garden Street Iron & Metal and members of the Weber family, who own and operate it, also have processing operations, including an auto shredder, in Cincinnati. The Weber family’s Ohio properties were not purchased by DJJ.
Recycling Today’s list of North American automobile shredder operations published in 2020 indicates that the Grossman site in St. Louis and the Garden Street site in Fort Myers both feature shredding plants.
Nucor says the additional Missouri and Florida locations represent “a 10 percent growth in capacity” for DJJ. The steelmaker says their addition is “consistent with Nucor’s growth strategy and demonstrates our commitment to expanding the regional recycling platforms supporting our steel mills.”
Photo courtesy of U.S. Steel Corp.
US Steel searches for new EAF mill site
Pittsburgh-based United States Steel Corp. has announced what it calls an exploratory site selection process to build a new electric arc furnace (EAF) flat-rolled steel minimill in the U.S.
Its board of directors has authorized the process to find the best location for two EAFs plus “finishing technology” for a mill that will have 3 million tons of annual capacity. U.S. Steel says the site could contain “purchased equipment already owned by the company.”
The continued adoption of minimill technology will expand U.S. Steel’s ability to produce “the next generation of highly profitable proprietary sustainable steel solutions, including advanced high-strength steels,” the firm says.
Potential locations include states in which the company has existing EAF operations (Alabama and Big River Steel in Arkansas) as well as greenfield sites. U.S. Steel says the investment is expected to be funded primarily from existing cash and expected free cash flow. The final investment requirement is subject to ultimate site selection and scope of value-added downstream finishing assets.
“Our customers are looking for like-minded partners to continue marching towards a sustainable future,” says U.S. Steel President and CEO David B. Burritt. “We already own and operate the most advanced and sustainable minimill in the United States. Now we plan to expand this competitive advantage by continuing to combine our research and development and product innovation, deep customer relationships and low-cost iron ore with additional minimill steelmaking technology to create long-term value for our investors. Our goal is to build capability to get better, not bigger. By accelerating our transition to more efficient minimill steelmaking, we expect to continue differentiating ourselves versus less efficient capacity while improving our through-cycle profitability and lowering our capital and carbon intensity.”
Although Burritt refers to iron ore, EAF steelmakers most commonly melt ferrous scrap and semiprocessed iron ore products, such as direct-reduced iron and hot briquetted iron.
The planned investment is being touted by the company as a step toward achieving its 2030 goal of reducing its global greenhouse gas (GHG) emissions intensity by 20 percent compared with a 2018 baseline. “Additional minimill steelmaking will also create a platform to expand U.S. Steel’s verdeX sustainable product line, delivering differentiated steels made with significantly lower GHG emissions than the traditional integrated steelmaking process,” according to the company.
U.S. Steel says the final site selection and other construction terms are subject to factors that include state and local support and final approval by the company’s board of directors.
Once the site is selected, construction on the facility could begin in the first half of 2022 with “production currently expected to begin in 2024,” according to U.S. Steel.
Cleveland-Cliffs expands scrap recycling presence
Cleveland-Cliffs Inc., a steel producer and iron ore pellet provider that is based in Cleveland, has promoted three people at the executive level as it seeks to broaden its raw material portfolio by expanding its scrap recycling presence under the newly created division named Cleveland-Cliffs Services.
Clifford T. Smith, previously executive vice president and chief operating officer at Cleveland-Cliffs, has been promoted to executive vice president and president of Cleveland-Cliffs Steel. He continues to lead operations for all the company’s business segments, including steelmaking, tooling and stamping and tubular components. Smith joined Cleveland-Cliffs in 2003. He has served as chief operating officer and executive vice president for business development since 2019.
Keith A. Koci, previously executive vice president and chief financial officer at Cleveland-Cliffs, has been promoted to executive vice president and president of Cleveland-Cliffs Services. Koci assumed corporate responsibility for procurement, logistics, information technology and scrap recycling. He will lead the growth of Cleveland-Cliffs’ raw material portfolio, with a primary emphasis on expanding the company’s presence in the domestic scrap recycling market. Koci joined Cleveland-Cliffs in 2019 and has served as executive vice president and chief financial officer for his entire tenure with the company.
Celso L. Goncalves, previously senior vice president of finance and treasurer at Cleveland-Cliffs, has been promoted to executive vice president and chief financial officer of the company. He leads the financial organization for Cleveland-Cliffs, assuming responsibility for finance, accounting, tax, treasury and investor relations. He also continues to lead strategic corporate and business development initiatives.
All three individuals will report to Cleveland-Cliffs Chairman, President and CEO Lourenco Goncalves, who says, “Cliff Smith, Keith Koci and Celso Goncalves have been critical contributors to our remarkable transformation over the past two years, and I will rely on them to continue to execute on our strategic objectives.”
Scepter to supply Novelis with high-recycled content aluminum ingot
Scepter Inc., a secondary aluminum recycling and trading company that is based in Waverly, Tennessee, has announced a multiyear agreement with Atlanta-based Novelis to supply more than 200,000 tons of aluminum ingot featuring up to 95 percent recycled content. Novelis will roll and finish the ingot for its customers that manufacture aluminum beverage cans and food containers in the U.S.
Scepter produces recycled products at facilities in the United States, Canada and Europe. The company has produced rolling ingot from recycled scrap at its Waverly plant since 1991.
“Scepter is committed to use more scrap, reduce emissions and contribute to the overall sustainability of aluminum,” says Garney Scott, CEO of Scepter Inc. “We are excited to partner with Novelis to continue these efforts. Our unique technology and capabilities will produce high-quality ingot that meets bold sustainable objectives set by Novelis,” he adds.
“Novelis’ purpose is shaping a sustainable world together, which recognizes the importance of working with partners throughout the industry to advance sustainability for our customers,” says Tom Boney, executive vice president and president of Novelis North America. “We’re proud to continue working with Scepter to advance aluminum as the most sustainable material choice.”
This supply agreement will result in an estimated carbon reduction of 1.2 million tons compared with using prime-based sheet ingot, supporting both companies’ sustainability objectives, according to a news release issued by Scepter.
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