January/February 1995
With the economic recovery finally stretching to cover most of the globe, reports at the BIR’s fall convention emphasized strong scrap demand—even spot shortages—in international markets as well as changes in the direction of world scrap flow. The meeting also offered a possible new angle on Basel Convention problems.
By James E. Fowler
James E. Fowler is publisher and editorial director of Scrap Processing and Recycling.
Amid a mood of optimism stimulated by bullish commodity market reports from around the globe delivered at the Bureau of International Recycling’s (BIR) fall conference (held at its headquarters’ home in Brussels, Belgium), the organization was handed an olive branch by Greenpeace. In a presentation at the event, a representative of the giant environmental advocacy group offered to help international recyclers overcome restrictions to legitimate scrap trade resulting from the Basel Convention. But he also criticized the BIR for its efforts to change Basel.
Emphasizing common ground between the two organizations at the environmental committee meeting in Brussels, Jim Puckett, European toxic trade prevention coordinator for Greenpeace, told BIR participants his organization is only concerned “over a very small percentage of your business…probably less than 5 percent” of the materials handled by scrap processors in international trade, by including “hazardous wastes” such as lead, cadmium, chromium, and polyvinyl chloride. Greenpeace is not opposed to trade in the bulk of commodities of concern to scrap recyclers, including paper, iron, steel, copper, and aluminum, he added.
Puckett chastened the BIR for “overreacting” to the Basel Convention and called the group’s “defensive strategy” a mistake. “You cannot hide behind recycling,” he said. “We cannot accept your contention that since recycling is ‘less bad,’ it is a viable option to the long term” for handling hazardous waste material.
“It’s time to pull our collective heads out of the sand and look upstream at the source of the problem,” said Puckett. “Changing the Basel definitions of waste will not make this problem go away. Products must be redesigned so that we do not have hazardous inputs from day one. Working together, we can make headway and we all share this responsibility.”
“Let’s look forward,” he said in concluding his presentation, “let’s continue this dialogue.”
In response, Environmental Committee Chairman Patrick A. Neenan of AMG resources Ltd. (Harborne, Birmingham , England ) noted that he, too, believes the areas of agreement between the BIR and Greenpeace far outweigh the areas of disagreement, and he announced that the BIR would appoint a small working party to maintain contact with Greenpeace.
[Such a group has since been organized, with Neenan, BIR Secretary-General Francis Veys, and Anthony P. Bird of Bird Group of Cos. Ltd. (Stratford-upon-Avon, England)—who was names honorary president of the BIR ferrous division at the group’s fall meeting—representing the recycling industry and Puckett representing Greenpeace. The group’s first meeting was scheduled for Dec. 19 in Amsterdam, where the members were set to have an informal discussion to determine areas of common ground and interest. In addition, according to Veys, the BIR reps also planned to discuss how change could be made in the Basel waste definition.]
Others have also begun to recognize the threats posed to international recycling by ill-conceived waste rules. In his comments to the committee prior to Puckett’s presentation, Neenan reported that “the recognition by countries around the world that it was a grave error to include recyclables in waste regulations is now becoming apparent, with exemption from regulation being on the agenda of many legislative review bodies.”
The technical working group of the Basel Convention has also been demonstrating this realization, Neenan said, citing a July meeting of the group. “It was interesting to note the concerns that original support for the proposed ban on movements of hazardous waste would endanger the legitimate trade upon which their industries were dependent. In addition, a number of member countries of the Organization for Economic Cooperation and Development claimed that subsequent decisions have so dramatically changed the spirit and content of the convention that it is no longer the document originally signed and ratified by the parties.
Ferrous Crap Demand Reported Growing, Spreading
“For the foreseeable future, until the end of the century at least, there is no reason to believe there should be a shortage of ferrous scrap in the industrialized countries,” said Patrick Genevaz of the Paris-based consulting firm la Chambre des Cartes at the ferrous division meeting, adding his two cents to the shortage debate now hot in steel industry circles.
“The industrialized countries are now major exporters on the world scrap market,” he explained. “ Europe stopped being a net importer at the end of the 1980s, with a few fluctuations, and started to export about 1990,” he said, noting “ Japan is now at the beginning of the cycle. …It is very likely that Japan will become a net exporter.”
Adding to his forecast, Genevaz said he expects Asian steel production to grow by 25 million tons in the next decade, and he predicted that scrap needs in the developing countries in Asia to meet that production level will be supplied by developed countries in the region such as Japan . Nevertheless, he said that there will be strong growth in the market for direct-reduced iron and iron concentrates.
Reporting on the U.S. ferrous scrap market at the division meeting, Edward Hollander of Glencore Ltd. (Glenview, Ill.) projected steel production of 97 million tons for 1994, with mills operating at 90-percent capacity. He said that 2.5 million tons of new steel capacity was added in 1994 and an additional 4 million to 6 million tons is expected in 1995. At least 2 million tons of pig iron was imported in 1994 through September to meet the robust production level, he estimated, adding that heavy shipments were also due during the fourth quarter.
Turning to the export market, Hollander noted that while scrap export prices have traditionally stayed above the domestic prices in the United States for the past couple of years, this has not been true recently and scrap exports have therefore fallen off. This trend is beginning to change, however, he observed, as demand by overseas mills has been increasing dramatically. As examples he pointed to increased orders from Korea and unexpected demand from Japan , which has not been much of a buyer in the past few years. On the other hand, factors in the freight industry are working against such a turnaround, Hollander said, noting that demand for shipping capacity had increased by some 20 percent in September and October, causing scrap exporters major problems in finding sufficient ships to fill their existing orders.
Looking to 1995, Hollander concluded by commentating that he foresees “exceedingly good business, and with this good business there could be less scrap available for the export market, which could push export prices even higher than they are now.”
John Crabb of Simsmetal Ltd. (North Sydney, Australia), a ferrous division vice president, also spoke at the ferrous session, reporting that “global demand for scrap is increasing and the supply-demand equation, in many instances, is still tilted in favor of the supplier.” Zeroing in on the fundamentals in specific regions, he said, “My view is that while there is good domestic demand in both the United States and the European Union countries, there is no immediate improvement in availability and accessibility of scrap arising from Eastern Europe and other nontraditional sources. These factors, combined with ongoing volatility in currency relationships, will result in stronger East Asian scrap prices.”
The Japanese steel scrap market has become positive after a two-year depression, Hideo Itoh of Nakadaya Co. Ltd. (Tokyo) added to the Asian report, pointing out that prices by October had increased by 20 to 25 percent since June, while scrap generation was still 10 to 15 percent less than during the same 1993 period.
Nonferrous Markets Called Hot With a Few Lukewarm Spots
Nonferrous markets in the United States and around the world have benefited from higher prices on metal exchanges, according to Robert Stein of Louis Padnos Iron & Metal Co. ( Holland , Mich. ), speaking at the nonferrous division meeting. “This,” he continued, “coupled with a continued robust economy in the United States as a result of steady markets for automobiles, housing, and capital goods, has resulted in a healthy demand situation for nonferrous metals. With industrial production at high levels, and material flowing well through the market to its appropriate point of consumption, nonferrous scrap has, for the most part, enjoyed a good period indeed.”
Stein continued his generally upbeat market report with an examination of individual nonferrous commodity markets. For aluminum, he said, higher prices have drawn a good and steady supply of scrap to the market, and mills report excellent sales of their products, thus creating a positive outlook. Citing the used beverage can market as the main exception to this adequate-supply scenario, he noted that the can market has been very tight, and as a result has been experiencing very strong upward price movement.
The prospects for copper scrap markets in the United States are good, Stein continued, noting that he expects an even better demand situation going into the first quarter 1995.
The zinc market has a not enjoyed the strong prices that have been realized in other base metals, and recent price rises have only helped match prices of the early part of the year, Stein reported. Nevertheless, he added that demand for scrap zinc is good and is expected to remain so, with some concern that supplies will continue to tighten as more buyers pursue scrap.
Finally, turning to lead, he said that although values rose on the London Metal Exchange (LME) about 45 percent this year, lead and battery scrap prices in the North American market did not rise proportionally. In fact, he noted, batteries have actually declined in price, primarily because of a change in market consumption patterns caused by one retailer’s switch to a new supplier.
Taking in U.S. markets as a whole, Stein concluded that higher interest rates “may be the only potential downside to what appears to be a very positive future for the nonferrous metals markets in the United States for the foreseeable future.”
Nonferrous market reports from other parts of the world were generally positive as well. For instance, Eberhard Kerscher of Georg GmbH & Co. KG (Fuerth-Bislohe, Germany) and a division vice president noted good demand for nonferrous scrap in Germany , pointing to aluminum as the material recording the biggest increase. One “unpleasant feature” of this increased demand, he said, is that consumers are buying small quantities directly from small dealers. As a result, the wholesale trade has to fight for each ton of aluminum it gets, he complained.
The Asia-Pacific nonferrous markets, meanwhile, have seen prices driven up by strengthening demand throughout the region and lower scrap availability from many traditional international suppliers, said Simsmetal’s John Crabb, also a nonferrous division vice president. Genera; aluminum scrap grades have recovered approximately 17 to 18 percent and some premium grades even more, he said, adding that copper scrap has also risen strongly.
Summarizing the situation, Crabb said, “Japan is recovering and China is playing a more active role. The rest of Asia is also still growing strongly, particularly Korea. As a result of these positive fundamentals, I believe, primary metal prices have a further upside, and nonferrous scrap demand and prices in the Asia-Pacific region will also be stronger.”
The nonferrous division meeting also featured a special presentation on the recycling catalytic converters from European motor vehicles led by Clemens Hensel of European Autocat Recycling (EAR) (Alzenau, Germany). Recycling of catalytic converters in Europe is still in its infancy owing to the relatively recent introduction of automobile catalytic converters in Europe —some 20 years later that in the United States, he said. Nevertheless, Hensel predicted, the number of autocats the industry recycles should increase from some 1 million annually now to 8 million a year by the end of the century and to 18 million units by 2010.
With the economic recovery finally stretching to cover most of the globe, reports at the BIR’s fall convention emphasized strong scrap demand—even spot shortages—in international markets as well as changes in the direction of world scrap flow. The meeting also offered a possible new angle on Basel Convention problems.