January/February 1988
BIR in Zurich: Report on the Autumn Conference The European Economic Community is exporting ferrous scrap to the United States, which traditionally has been the biggest scrap exporter in the world. Attendees at the Bureau International de la Recuperation’s autumn conference offered insights into this phenomenon and more.
By Ian Cooper
Ian Cooper is editor of Materials Reclamation Weekly, London, England
To quote Dutch Scrap Federation President Fred Nijkerk, "The world has been turned upside down." That's the way it seemed to many attendees at the autumn conference of the Bureau International de la Recuperation (BIR) in Zurich November 2-4. Could it really be true that ferrous scrap was being exported from the European Economic Community (EEC) to the United States, the biggest exporter of scrap in the world?
Fred Nijkerk confirmed it. Two cargoes for the U.S., totaling more than 30,000 metric tons, had been loaded in Rotterdam, and history had been made. Exports from the Netherlands were expected to top 1.5 million metric tons by the end of 1987. As Nijkerk pointed out, that would surpass the entire domestic collection. He attributed the situation to heavy imports of Belgian and West German scrap, which were immediately reexported from Rotterdam, where three major scrap terminals were fully engaged in loading and transshipping growing quantities of scrap.
BIR Ferrous Division President Constante Guerrini, of Italy, was not alone in wanting to know how long this exportation to the U.S. might go on. Understandably, no one from the U.S. delegation, or anyone else for that matter, could offer an authoritative answer. Said one U.S. delegate, "If I knew, I would leave the hail now and make my fortune."
Such an unorthodox development in international scrap trading left a few merchants in European Community nations wondering whether the Commission of the EEC may not be pressured into curbing exports to so-called third-world countries. On hand to provide an answer was Albert Carnivali, an official of the Brussels-based commission. "I don't think anyone is very worried," he told the meeting. "It is just an episode."
In view of the fact that the flow of ferrous scrap is usually from the U.S. rather than to it, Carnivali was asked what would happen if the powerful U.S. steel lobby succeeded in securing a veto on U.S. scrap exports. That, admitted Carnivali, was the "million-dollar question." The EEC could discuss the matter with the U.S. authorities, but at the moment scrap was not among the products that would be considered in such circumstances. He acknowledged that if scrap were not exported by the U.S. for a long time, the EEC would have a problem.
Heinrich Hitzbleck, of West Germany, a past president of the Ferrous Division, believed the matter was being blown out of proportion. In his opinion, nothing was changing. Hitzbleck did not expect the trading phenomenon to last for more than two or three months.
Commenting on ferrous affairs in West Germany, Hitzbleck emphasized how important the influence of the world market had become. West German steel production had declined, scrap consumption had gone down, and yet scrap prices had risen, with exports up by more than 17 percent. "Demand in the world market will remain," he forecast, "and will keep prices where they are. It will be a function of the dollar exchange rate."
Sidney Greenberger, of National Nickel Alloy, Pittsburgh, Pennsylvania, reported on nickel-bearing and other specialty steels. "We may have three or four months of excellent business, and then head for shelter," he said. "For, surely, booms do turn to busts, and what goes up must inevitably come down." Greenberger was bullish for the short term and bearish about prospects beyond the second quarter of 1988. "I expect there will be little or no growth in the U.S. economy in 1988," he said.
Vice-President of BIR on the Executive Council and Chairman of the BIR Stainless Steel and Special Alloys Committee, Barry Hunter, of The Samuel G. Keywell Co., Elizabeth, New Jersey, confirmed that the U.S. market was continuing at a very firm pace. But the impact of the stock market collapse and other economic factors were posing questions. "Have fun and enjoy, as it has been a long dry spell," advised Hunter with a grin.
At the moment when business was at last beginning to improve, lamented Nonferrous Division President Michael Lion, of the U.K., uncertainties and question marks were appearing over world economies. Yet, he emphasized, national reports indicated that in the short term there would be a sustained demand for some secondary metals.
Not for the first time, Lion strongly emphasized the importance of legislators seeking industry input when drafting environmental laws. "Our constant address to this issue is probably the most important role that we can fulfill for our members."
The "quite striking" rise in the price of some materials had created more flexibility in margins, Lion commented. However, many conference attendees were anxious about the length of time this improved situation might continue.
Further grave worries about the effects of environmental legislation on the industry came from Chairman of the Shredder Operators Committee, Tony Bird, of the U.K. Bird, who was to succeed Guerrini as president of the Ferrous Division, warned that if the metallics content of automobile shells falls by 4 to 5 percent, "we shall be very nearly on the breadline." With a drop of 10 percent, he continued, "we are all out of business."
Several national reports echoed his sentiments, for although better prices had improved the return on investment, the cost of disposing of shredder waste was rising. In an increasing number of cases, disposal itself was becoming more difficult. Two guest speakers described the implications of the rising tide of plastics in automobiles, which spelled trouble for the steel industry as well as for shredder operators.
At the meeting of the Paper Stock Division, the mood was upbeat. Vice President Robert de Paauw, of the Netherlands, observed, "It's nice that after a long period we now see that waste paper prices are improving." Exports of paper stock were rising, said de Paauw, and it was possible for European merchants to sell to markets as distant as the Far East, Africa, and even South America. But he was concerned about what was exported. "Let us export quality and not quantity," he urged, "then we have the chance that the exports can go on for a long period, and that will guarantee us a good future."
For the U.K., Colin Doland reported "substantially greater" exports. This, along with increased mill output, high waste paper consumption, and forecasts of expanding utilization capacity, were encouraging signs. However, mill stocks were still well above the optimum, which had kept prices of bulk grades depressed. Consequently, margins were reduced.
Unbridled municipal waste paper collections in West Germany caused havoc not only on the domestic market but in neighboring countries, especially Italy. The situation had improved, even in the Federal Republic of Germany, although there were still some price problems.
For the U.S., Jeffrey Padnos, of Louis Padnos Iron & Metal Co., Holland, Michigan, reported that in the last two years the price of old corrugated had climbed to an all-time record. "We now seem to have reached the top of the roller coaster," he said, "and may have started a slide downward." High grades were in excellent demand, and although mixed waste paper was in chronic oversupply, it had been moving reasonably well.
Perhaps the most pessimistic view came from Giampiero Magnaghi, of Italy, who believed that the domestic collection system had declined far more violently than official statistics had suggested. "I can see nothing to awaken my enthusiasm," he said.
In the textiles sector, crisis had become what Division President Carl Schoenfeld, of West Germany, described as "a thorough upheaval." Increasingly, products from reclaimed fibers could not be made in Europe because costs were too high. Even Prato, the famous Italian centre, had to a considerable extent shifted to high-quality products using cashmere silk and "not a single ounce of reclaim." The price of material was no longer as important in the costs balance of manufacturing, and higher margins could be- obtained by moving upmarket. The result was lower demand for rags and clippings.
The position was summed up by Past President of the Textiles Division Thomas Gaiger, of Austria, as "catastrophic. ... We have to find something more worthwhile to do."
The European Economic Community is exporting ferrous scrap to the United States, which traditionally has been the biggest scrap exporter in the world. Attendees at the Bureau International de la Recuperations autumn conference offered insights into this phenomenon and more.