July/August 1992
Nearly 800 scrap recyclers from five continents traveled to Paris in the spring to attend the BIR 's annual convention, offering them the opportunity to discuss common goals and problems.
By Elise R. Browne and Si Wakesberg
Elise R. Browne is editor of Scrap Processing and Recycling. Si Wakesberg is the magazine's New York bureau chief.
They came to Paris from 30 different countries, but delegates to the Bureau International de la Recuperation (BIR) (Brussels, Belgium) convention in mid-May shared one seemingly universal concern: Has international trade of recyclables forever been altered by the May 5 final implementation of the Basel Convention on the Control of Transboundary Movement of Hazardous and Other Wastes?
The simple answer was yes. Defining exactly how scrap recycling has been affected by the multinational treaty, however, is a complicated matter that seems to change at the spur of the moment, speakers noted.
Knocking Down the Stoplight?
A major factor in determining the exact equation is the recently enacted accord of the Organization for Economic Cooperation and Development (OECD) (Paris), which provides for continued unrestricted trade of most recyclables among its 24 member nations. While the agreement is "far from ideal" in that it only protects trade within the OECD, BIR Environment Committee Chairman Patrick Neenan of AMG Resources Ltd. (Birmingham, United Kingdom) called it "far more acceptable than Basel," which limits the movement of undefined "hazardous and other wastes" among countries that have signed the convention and prohibits movement of such materials between signatory and nonsignatory nations unless they have a separate agreement governing the movement.
Outlining the three-tiered requirements of the OECD agreement, Pierre Lieben of the OECD's environment committee pointed out that most scrap materials appear on the agreement's "green" list, excluding them from control when shipped between member nations for recovery. (Lead-acid batteries and certain drosses and residues are included on an "amber" list, subjecting them to tacit consent procedures prior to shipment. Materials containing polychlorinated biphenyls and other chemicals are controlled by the "red" list, which requires written consent prior to shipment.) Nevertheless, Lieben noted, existing laws in OECD member countries could force additional constraints on the trade of some scrap materials.
Further diluting the hope many had for the OECD agreement was news that three member countries—Italy, Belgium, and the Netherlands—were pressing for a review of the stoplight control scheme, perhaps pushing some items now on the green list onto the red or amber lists.
In addition, these nations have called for a total ban on the export of all recyclables outside the European Community and OECD countries, said Nonferrous Division Vice President Robert Voss of Voss International Ltd. (Middlesex, United Kingdom), who also serves as vice president of Eurometrec, a BIR sister organization. "To put this bluntly," he explained, "this would mean that the sale and shipment of any of our goods to Taiwan, Korea, India, China, most of the Middle East, Africa, Eastern Europe, South America, and other countries would simply stop. ... We have to fight to save our own industry."
(Editor's note: This issue had yet to be decided at press time.)
Political Pressures to Recycle Rise
BIR attendees shared concern about other issues as well. Discussions of politically driven recycling mandates and their effect on scrap markets, for example, came up at sessions covering a variety of commodities.
Such laws have increased the recycling rates of some materials. European glass recovery, for instance, hit about 6 million metric tons (mt) in 1991, up approximately 15 percent compared with the 5.2 million mt recycled the previous year, according to Guy Robyns of the European Glass Container Federation (Brussels, Belgium). The continent's leader, the Netherlands , he noted, recorded a 70-percent rate last year and has a goal to recycle 90 percent of its glass containers by 2000. At the same time, however, delegates from various countries reported that increased collection of glass has created gluts in some nations, thus wiping out profit margins and creating storage capacity problems.
Anxieties of a similar nature were imparted by paper recyclers, many of whom voiced particular concern about the German "Dual System." The system requires manufacturers of packaging distributed in Germany to take back for recycling all of their used packaging in specific parts of the country unless a certain national recovery goal is achieved.
If fully implemented, the system would force an additional 6 million mt of scrap paper onto the international market by 1995, declared Philippe Brogniart of Societe Industrielle du Transport Automobile (Paris), an association representing French hauling firms. Calling the collection of such quantities "compulsive," he noted that the French response has been a proposed ban on German scrap paper imports.
Manfred Sanne of Sanne, Kruse & Pape GmbH & Co. (Hamburg, Germany) was less critical of the Dual System, but admitted that German paper recovery rose 15 percent in 1991, while consumption recorded gains of only 8 percent compared with the previous year. Nevertheless, he said, prices have stabilized. And although the quantity of scrap paper packaging could increase by 2 million mt in the next two to three years if the entire Dual System is put into place, there's room for increased consumption throughout Europe to recycle this material, Sanne pointed out. Many European newsprint manufacturers, for example, use a relatively low recycled content, he said, noting that while German newsprint has an average recycled content of 60 percent, Sweden 's average is around 10 percent.
The Dual System has also create unusual new German recycling industries—including a plastic strapping tape recycling business. According to Heinz Wolfgang Hellwig of Kunststoffband Verwertungsgesellschaft GmbH (KBV) (Cologne, Germany), to comply with the law, plastic strapping tapes (such as those used to bind pallets) are collected by distributors and forwarded to KBV, where they are sorted by resin, granulated, separated from their metal connectors, washed, dried, and sold for reuse. The biggest obstacles to the process, he said, has been identifying the resin type—a problem that he hopes will be overcome by a new color-coding system tape manufacturers are implementing.
Perhaps taking the Dual System as its clue that take-back recycling mandates could be thrust onto manufacturers in other countries, Peugot SA Group (La Garenne-Colombes, France) has initiated a vehicle recycling partnership with an automobile shredding operation and a cement company. In the partners' pilot program, explained Peugot's Jean-Jacques Lanfranchini, old automobiles are transported to a high-tech disassembly plant near Lyon, France, where four workers drain the fluids and remove the batteries, engines, radiators and other accessories, seat foams and fabrics, glass, and plastic parts from two vehicles every hour.
The remaining hulks are shredded by Compagnie Francaise des Farrailles (Paris), with the recovered metal sold to ferrous and nonferrous scrap consumers. The residual fluff is ground and pelletized, then used as a fuel source by cement makers, which reportedly consume about two-thirds of the pellets produced. The remaining third has the potential for use as a raw material in manufacturing asphalt, insulation, and other construction products, Lanfranchini noted.
Peugot has also "started to produce vehicles designed for disassembly and recovery," he said, noting that the automaker is "giving preference to easily recyclable materials such as polypropylene" over other plastic resins and is working toward using a single resin type for each major plastic component in its cars.
East European Exports Enter the Equation
The pressure of Eastern European metal exports on scrap markets was another topic that found its way into discussions inside and outside the convention's meeting rooms. One example: Last year, said Nonferrous Division Vice President Larry Sax of J. Sax and Co. Inc. (Boston), "abundant" deliveries of aluminum from former Soviet republics, combined with diminished end-user demand, pushed aluminum stocks on the London Metal Exchange (LME) to new record highs, forcing metal prices lower.
In the stainless steel arena, the outflow of nickel shipped from currency-desperate Eastern European countries has virtually closed U.S. scrap exporters out of the European market, noted Stainless Steel and Special Alloys Committee President Barry Hunter of Keywell Corp. (Port Elizabeth, N.J.). In fact, he said, through the rest of 1992, "exports to historic European markets will be at best on a spot basis, as available nickel units, especially from Russia, will tend to keep prices lower or, at best, on balance with our American consuming markets."
And in the copper market, according to Norbert Brodersen of KM-Kabelmetal AG (Osnabruck, Germany), large quantities of Polish and other Eastern European copper and copper-alloy scrap have been felt on Western European markets for the last two years. This situation is expected to change in the near future, he said, because of reactions to the fact that domestic copper-based semi production in Poland has been reduced due to lack of scrap supplies. "To reduce the export flow, the Polish government has installed an export license system and export quotas," Brodersen reported, adding, "Similar systems have already been established or are in the decision-making process in Russia ."
Quality Demands on the Rise
Besides predicting declining Eastern European scrap exports, Brodersen also forecast increasing demand for higher-quality copper-based products over the next five years, and thus, increasing demand for higher-quality copper-based scrap input.
Quality will become a more and more important issue for aluminum scrap too, according to the predictions of Andrew O. Smith of Cookson Aluminium Ltd. (Derby, United Kingdom). "The latitude that existed for foundry alloy manufacturers to supply a product of variable quality is fast disappearing," he said, as are the markets for scrap supplies "of the same unmerchantable quality."
France, he pointed out, has a quality-rating system for aluminum scrap suppliers whereby "the more reliable and assured suppliers—those who show themselves to get an `A' rating—get the price, while those who achieve a `B' or `C' rating do not." The future may see the introduction of similar systems in other parts of the world, noted Smith, who also predicted that, as secondary aluminum producers improve their efficiencies and increase their use of their new scrap, more emphasis will be placed on old scrap at the dealer level.
Recovery Sightings
The economic recession seems to have hurt every recyclable commodity all over the world, with scrap executives at the Paris meeting nearly unanimous in their descriptions of mediocre activity, sluggish prices, thin margins, and lackluster demand. Nevertheless, many also shared the view that conditions would soon hit more positive notes.
"It's a good day," said Sidney Greenberger of National Nickel Alloy Corp. (Pittsburgh), perhaps the most optimistic of all. "The U.S. recession has ended." While 1992 will not be a banner year, he added, "it will undoubtedly show improvement over 1991." For the coming months he projected improved nickel pricing as the recovery continues in the United States and spreads to Europe and Asia by the fourth quarter, and forecast continuing improvement in home building, retail sales, business equipment, and capital goods. Furthermore, Greenberger said, "1993 is only a half-year away, and it should be a very good year for metal dealers everywhere."
Other speakers may have been less enthusiastic in their forecasts, but nevertheless predicted that improvements in demand and prices are within sight. Some of their comments:
- "I see a normal slowdown during the summer months, but, in general, anticipate decent demand for the balance of 1992," said Barry Hunter, describing stainless steel scrap.
- "Although far from robust, the American economy seems to be pulling out of recession," said William Burson, recently retired from Southwire Co.'s Gaston Copper Recycling Corp. (Gaston, S.C.), who pointed to a rise in business confidence, new housing starts, increasing auto sales, and the need for infrastructure development as positive signs for the copper industry and the economy as a whole. And though new technologies are encouraging the replacement of copper and aluminum by plastics, fiber optics, and digital switching materials, these competitive materials aren't as easily recycled as metals and therefore "face a much tougher road as recycling regulations grow more stringent," he noted.
- Because aluminum is "green" and responds to concerns about the conservation of natural resources and the protection of the environment, "secondary aluminum will continue to grow at a faster differential rate than the total aluminum supply," said Andrew O. Smith. "The demand for scrap," he added, "will also increase to reflect this uplift."
- According to John Crabb of Simsmetal Ltd. (North Sydney, Australia), a vice president of the ferrous and nonferrous divisions, while the Far East has entered a period of lower economic activity, "an aggregate Asian growth rate of 5.5 percent is still expected during the current 12 months. Although, in the short term, markets will be difficult and competition for sales will intensify, the Far Eastern region will continue to outperform any of the Western economies during this period."
Of course, there were a few delegates who couldn't muster much hopefulness at all. Mehmet Gultekingil of Izmir Demir Celik Sanyai AS (Izmir, Turkey), for example, said that, despite the potential for reopening a 450,000-mt-capacity electric furnace plant closed last year because of financial problems, Turkish "consumption of steel scrap is not expected to increase due to the domestic and global economies." In addition, he anticipates domestic scrap supplies to remain at 1991 levels.
Takahiko Kaito of Sumitomo Corp. (U.K.) Plc. (London) offered an equally less-than-cheerful view of the metal industries in Japan . Discussing that country's aluminum market collapse in mid-1991, he noted that no signs of recovery had appeared yet. " Japan was the last country to get into the recession," Kaitoh concluded, "and it will be the last to get out."
Leaders Face Uncertain Future
The spring convention also featured election of BIR vice presidents: Stanley Hill of Coopers Metals Ltd. (Swindon, United Kingdom) was elected to a second term of office, while Giorgio Manunta of Transider SpA (Sesto San Giovanni, Italy), Rolf Naeslund of O. Bergerud AS (Drammen, Norway), and Maximilian Schafer of Hetzel & Co. (Nuremberg, Germany), were elected to first terms.
Depending on the outcome of international trade controls related to the Basel Convention, these vice presidents could see their terms coinciding with the most difficult years ever for international trade of recyclables. On the other hand, if accords such as the OECD plan that grant exemptions for recyclables hold up, and the world's major economies move toward further improvement, these men could help lead the BIR through some of the most satisfying times in years. •
Nearly 800 scrap recyclers from five continents traveled to Paris in the spring to attend the BIR 's annual convention, offering them the opportunity to discuss common goals and problems.