January/February 1998
Mounted on excavators or other machines mobile shears give scrap processors
the cutting edge they need when processing ferrous and nonferrous material.
By James E. Fowler
James E. Fowler is Publisher and Editorial Director of Scrap.
Despite the troubles that developed last fall in the Asian stock market and Southeast Asian currencies, world scrap markets were still on a positive track at the end of 1997, with 1998 prospects appearing promising, said speakers at the October meeting of the Bureau of International Recycling (BIR) (Brussels) in Munich.
Ferrous Rolls On
The U.S. market continues to exhibit “very strong demand” for ferrous scrap as it has for the past two to three years, noted a report by Edward Hollander of Hollander Metals Inc. (Glenview, Ill.), which was read by Mitchell Padnos of Louis Padnos Iron & Metal Co. (Holland, Mich.).
Inflation has been “well in check” in the U.S. economy, and U.S. steel mill operating rates and utilization capacity “continue at an almost unprecedented high of 91 percent,” Hollander said. At the same time, imports of steel into the United States have also been high, with the biggest increase coming from Russia and lesser amounts coming from Turkey and China.
There has been a significant turn in exports, however, “particularly on the East Coast where exports have fallen dramatically,” Hollander said. “Traditionally, East Coast exporters have gone to the Far East, Turkey, and India. Indian purchases of scrap are almost nonexistent and Turkey has been well-supplied, mostly from the European and Black Sea areas.” While Far East consumers have been more reliable buyers of U.S. scrap, they are “very cagey,” he said.
Notably, much of the exportable U.S. shredded scrap that could be seen as overhanging the East Coast market has been absorbed by domestic mills. In addition, Hollander asserted, “domestic consumption on the West Coast is going to rise dramatically with increased demand by Birmingham Steel, Cascade Steel and North Star’s new plant in Kingman, Arizona.”
Overall, Hollander forecast, “prices and consumption should remain steady, but there will always be those little blips in one part of the country or another trying to upset the market.”
Reporting on the Pacific Rim and Far Eastern markets, John Crabb of Simsmetal Ltd. (Sydney, Australia) said that “acts of God, currency fluctuations, political movements, and bankruptcies have all been contributing factors in determining the recent C&F [cost and freight] prices in Asia. The ferrous trader is today watching world events as keenly as he watches the price negotiations of his competitors.”
Despite the generally sluggish Asian economies, “demand for ferrous scrap has so far remained reasonably firm,” driven in part by the increase in U.S. steel capacity, which has limited the amount of U.S. ferrous scrap available for export, Crabb noted. The positive effects of this situation, however, have been offset by increasing supplies of material from the Commonwealth of Independent States, he added.
Despite the growth of electric-arc furnace capacity throughout Southeast Asia, Korea continues to be the largest consumer in the region, Crabb said.
China, meanwhile, has imported little or no ferrous scrap in recent months due to “lower economic growth as a result of tighter monetary policy” and isn’t likely to show any “material increase” in its imports in the short term, he noted.
Despite the “dark clouds on the horizon” in many Asian economies, Crabb bet on a “stronger North Asian market, particularly in Taiwan and Korea.” In his view, “the region is both resilient and dynamic enough to overcome the current problems, and over the next decade the major Asian economies will continue to outperform the rest of the world.”
The Japanese ferrous scrap market found the going rough in the second half of 1997 due to production cutbacks by domestic minimills, declining export demand—with domestic prices often exceeding export offerings—and lower scrap consumption by blast-furnace mills, noted a report by Hideo Itoh of Nakadaya Corp. (Tokyo).
The European ferrous scrap market, meanwhile, has remained stable, despite reduced exports to Korea, other Southeast Asian consumers, and Turkey, noted a report by Alan Crowe of Mayer Parry Recycling Ltd. (Kent, England), which was read by Ferrous Division President Thierry Legait of Compagnie Francaise des Ferrailles (Paris). Instead, with European steel production up 7 percent compared with 1996, this scrap tonnage “has been absorbed into the domestic market to satisfy both the strong demand from existing mills as well as the new mills’ requirements,” he said. This increase in domestic scrap consumption has increased demand for higher-quality grades and prompted some European mills to import more material.
One of the main issues in the European market is the changing logistics of ferrous scrap demand and distribution, Crowe reported. As illustration, he noted that new minimills in Luxembourg and Belgium have been “cutting off supplies that were traditionally destined for mills in northern and central France.”
In sum, Crowe said that European ferrous scrap demand remains firm, while export demand is expected to increase, especially as “the Asian markets stabilize and as Turkey has to replace some of the volume it has been purchasing through the Black Sea region as the winter weather stems this flow.” Given this optimistic scenario, Crowe forecast that European ferrous scrap prices “must at worst remain stable but will more likely increase over the coming months.”
The Russian market, meanwhile, experienced a “remarkable increase of scrap supplies” in 1997, with total domestic and export shipments expected to reach 12 million mt compared with 10 million mt in 1996, according to Viktor Makouchine of the Mair Joint Stock Co. (Moscow). Along with these increasing supplies has been strong growth in exports, which were expected to average 450,000 to 500,000 mt a month in the second half of 1997, accounting for about 42 percent of total shipments, he noted. While Russia currently has enough ferrous scrap to meet its domestic needs, it could eventually become a net importer, Makouchine said.
Few Naysayers for Nonferrous
The sustained high performance of the U.S. economy has translated into brighter times for the U.S. nonferrous scrap market, whose prospects are good for the next six months, with most domestic consumers/ fabricators indicating good-to-strong orders, reported Robert A. Stein of Louis Padnos Iron & Metal Co.
U.S. demand for copper scrap is expected to remain steady in the near term “despite lower overall values and a notable absence of volume buying from China,” he said, adding that domestic demand may start to decline, however, “if inventory level adjustment occurs due to higher interest rates.”
In the aluminum sector, primary-grade scrap consumption should remain steady, with “many looking for higher scrap and terminal market values” and consumers forecasting an increase in sales activities in late 1997 and the first quarter of 1998, Stein said.
Secondary aluminum, he noted, “will see continued demand improvement in view of good automotive business, and consumers predict moderate improvements in their order books by about 4-to-5 percent.”
Lead has also enjoyed good demand and is expected to show further improvement during the winter, the metal’s high-use season, Stein said, adding that zinc demand is also “favorably viewed with good, steady business forecast for the near and intermediate term.”
While “there is no doubt that eventually our economic euphoria will end,” Stein maintained, “it doesn’t seem that a downturn will occur in the immediate future.”
The Pacific Rim and Far Eastern nonferrous scrap markets, meanwhile, have been affected by lower growth rates and currency crises in the region’s major economies. Even so, Japan, China, Korea, and India have helped the region maintain “reasonable demand, with most metals trading in a relatively narrow price range,” said John Crabb.
While overall Asian demand for copper scrap has been steady, “demand from China weakened a little after the Hong Kong handover as monetary supply tightened,” he noted. Even with the Chinese government’s plans to contain China’s economic growth at slightly below 10 percent a year, however, the country should still “create continued strong demand for copper and brass scrap, particularly Birch-Cliff and mixed brass grades,” Crabb maintained.
India has steadily become more of a force in the international copper and brass scrap market, while Korea continues to be a competitive buyer of hard-drawn copper and Candy-grade material, said Crabb, who expressed confidence in a continuation of good demand from northern Asia in the next six months.
As for aluminum, “demand and prices for both secondary ingot and aluminum scrap grades in Asian markets have been reasonable, although sentiment to some extent has been affected by weaker copper prices,” Crabb stated.
In the lead niche, “the primary market is listless and in need of direction. In the secondary sector, the international trade in scrap batteries continues to contract as the Basel Convention starts to have more impact,” Crabb reported.
Stainless Faces Tight Margins
In the stainless steel market, U.S. production remains good—heading for about 2 million tons of austenitic material—yet mills are making poor-to-average profits, primarily due to imports of stainless, noted Stainless Steel & Special Alloys Committee Chairman Barry Hunter of Keywell L.L.C. (Elizabeth, N.J.). “A great deal of emphasis in the industry is now being focused on trade cases related to damages to our domestic producers from imports,” he said. There’s also a great deal of talk about production cuts to combat these imports, but to date “it’s just talk and production remains the wild card in our supply-demand scrap situation.”
As for the U.S. stainless scrap market, Hunter said there isn’t an oversupply of 18-8 scrap as suggested in published reports, asserting that “available scrap remains tight and at best in balance with consumer
demand.”
For U.S. stainless processors, “margins continue to remain a real problem and a growing concern,” he said, explaining that “a general lack of material is stimulating an unrealistic aggressive dealer buying posture. This situation appears to be resulting in overpayment for product even at the lowest levels, as processors compete for available metal.”
Though there’s “strong potential” for production cuts in the United States, Hunter said, that would have “little impact on future availability of 18-8 scrap or on margins, as worldwide demand will continue to increase offshore interest in U.S. scrap.”
In the U.S. alloy scrap market, primary nickel is still available on monthly tender from the U.S. stockpile, while pure nickel scrap is in short supply and brings a small discount to cash LME nickel, according to Sidney Greenberger of National Nickel Alloy Corp. (Pittsburgh).
Demand for superalloy scrap, he noted, remains “great as new aircraft continue to be ordered. This should certainly last for several more years into the next century.”
Titanium, on the other hand, is in the “doldrums,” Greenberger said, asserting that this “does not bode well for early 1998 either. The sacrificial grades of turnings and off-grade solids will remain depressed for 1998.”
As 1997 ended, most U.S. alloy processors expected their volumes to be satisfactory but their margins to be elusive, Greenberger said, concluding that “there is scrap available and enough of it—and there is keen competition for every kilo.”
In Japan, the country’s “slight recession” and lower consumer spending, coupled with the currency uncertainty in Southeast Asia, cooled demand for Japanese stainless products in the second half of the year, noted a report by Hideo Itoh. Prices for finished products peaked in July and have declined more than $200 per mt since then. Stainless producers have been trying to increase their prices, but to no avail, he said.
Japan’s stainless steel scrap prices have also declined since their peak in July, and Japanese stainless producers are more reluctant to pay a premium for imported stainless scrap. Combined, all these factors “might lead to production cuts and less demand for raw materials eventually,” Itoh reported.
Paper Perks Up
The U.S. scrap paper market made a more positive showing in the second half of 1997 than expected, with domestic demand and prices stable-to-strong for many grades, noted a report by Steve Vento of Recycled Fibers International (Sunrise, Fla.), which was read by Paper Division President Gerry West of Severnside Waste Paper Ltd. (Whitchurch, Cardiff, Wales). Demand for pulp substitutes, for instance, was “very strong and low levels of generation are helping to maintain high prices,” he said, noting that “export activity should continue to be steady unless prices increase further.”
Prices of wood-free deinking grades are firm and material is moving steadily, with the reappearance of some export markets helping to keep the market in balance, Vento reported, adding that “no dramatic changes are foreseen.”
Among the low grades, Vento said mixed paper continues to be stable thanks to consistent buying by domestic mills. East Coast exports of this grade are at a “very low level, but cheaper West Coast freight rates are bringing some export activity.”
News grades are also steady and supply is keeping with demand at home and abroad, Vento said.
As for OCC, mills’ increased summer buying to rebuild their stocks and seasonally lower generation of this grade “caused a dramatic increase in prices,” he reported, adding that these prices will likely fall in late 1997 and early 1998 as generation improves. “If the domestic price of OCC falls too far, exporting will become possible, and the onset of early bad weather will slow generation,” Vento said, concluding, “if these two factors coincide, there will be a natural rise in prices.”
In the United Kingdom, scrap paper stocks have declined from previous high levels, though no serious shortages have developed and imports have been at a low level, reported West. U.K. scrap paper prices were largely unchanged in the third quarter, though demand for wood-free deinking and news grades was expected to push prices upward, he said. Scrap paper exports, meanwhile, were strong, with “competitive shipping rates and the high price of recovered paper in the United States making Europe an attractive source for many buyers in the Middle and Far East,” West noted.
Reviewing Radioactive Scrap
At a workshop on radioactive scrap, Ray Turner of David J. Joseph Co. (Cincinnati) said there were more than 2,700 reported detections of radioactive materials in the scrap recycling stream through June 30, 1997, adding that there have probably been “several thousand more” unreported detections. “The difficulties we face while dealing with problem shipments of recycled scrap metals will not improve until we, the recycling industry, take a proactive approach to solving them,” he stated. “This means we must no longer ignore the issue, keeping quiet about detections.”
The growing demand for metal scrap, employee health and safety concerns, the desire to avoid decontamination costs, and other factors are creating “a greater need for radiation detectors capable of finding that ‘needle in the haystack,’” Turner said. Currently, however, “there’s no foolproof system that guarantees 100-percent detectability in all cases.”
Until the perfect detector is developed, scrap processors should remember the general rule that “the closer a detection system is to the radioactive source, the easier it is to detect,” said Steve Steranka of Rad/Comm Systems Corp. (Brampton, Ontario). They can also follow these six steps to maximize their protection.
- Select an area such as the scale where all inbound and outbound material can be scanned.
- Select a detector such as a microprocessor-based system with large detectors that can detect a buried sealed radioactive source.
- Monitor scrap at each processing stage.
- Ensure that material in trucks is scanned slowly at no more than 3 to 5 mph.
- Establish safety procedures and train employees when a system is installed.
- Select a local radiation consultant who is familiar with the local regulations in the event assistance is required.
—J.E.F.•