BIR Meets in Brussels

Scrap recyclers throughout the world share many of the same concerns. Addressing those commonalities was the order of the day at the recent BIR convention.

By James E. Fowler

James E. Fowler is publisher and editorial director of Scrap Processing and Recycling.

Environmental issues and the outlook for markets were the main topics discussed at the Bureau International de la Recuperation's (BIR) fall convention in Brussels, which was attended by nearly 1,000 delegates from around the world.

One of the biggest announcements, however, focused on a different topic. According to David E. King, chief executive of the London Metal Exchange (LME), who spoke at the nonferrous division meeting, the LME is planning a "roadshow" in the United States this year. The objectives are to provide basic instruction in how the LME operates and how it can be used, and to teach potential users how to hedge. LME plans to offer the programs at five or six locations in the United States in 1991.

King also mentioned that the LME is considering instituting a secondary aluminum contract. He cited several issues to be decided, including the structure of the secondary aluminum industry--major producers and consumers by company, by country, and by product specification and tonnage. In fact, King said, the LME is “very aware that identification of the optimum specification of the contract will be a key issue, and not an easy one to resolve." Other issues to be resolved, he said, include quality, shapes, weights, the optimum size of a lot, the major currency denomination, the appropriateness of brands and quality assurance, and possible deterioration problems as well as determination of delivery points.

"If the contract is viable," King said, adding that he thinks it is, it should be in operation in 6 to 12 months (from late October).

"The establishment of a secondary aluminum contract could provide an opportunity for genuine hedge activity for those handling, processing, and trading aluminum scrap," said Michael C. E. Lion, Philipp and Lion Limited (London), who is president of the BIR nonferrous division and has been named to the committee investigating the contract. He said it could "have a wide-ranging impact on the whole mechanics in the future of pricing establishment for the raw materials used by the secondary ingot consumer," and would provide "enormous benefit" to scrap processors in the form of "real protection against price fluctuations.

Nickel’s Future

Simon Hunt, Brook Hunt & Associates Ltd. (Chertsey, England), presented "An Outlook for Nickel in the 1990s" at the stainless steel and special alloys committee meeting.

He said there should be "no doubt in the minds of thinking people about the fragile state of the world's financial system, weakened by the excessive accumulation of assets, bought mostly on credit at dotty prices in the 1980s." Hunt added that an international credit crunch has become a very real risk. Based on this outlook, he said, "for the purpose of our forecasts for nickel consumption we have assumed a 'muddle through' outcome. Recession will start in the manufacturing sector in the second quarter of 1991 in the United States and in the fourth quarter in Japan and most European countries and will last throughout most of 1991. Growth will thereafter resume."

Hunt forecast Western World stainless steel production to grow by 3 1 percent per year in the 1990s, from just under 10 million metric tons (mt) in 1990 to 12.5 million mt by 2000, after having peaked at nearly 13 million mt a year earlier.

For Western World primary nickel consumption he forecast an average annual growth rate of 2 percent in the 1990s--little different than the last 20 years--from about 1.43 billion pounds in 1990 to a peak of 1.60 billion pounds in 1999, but with a temporary drop to as low as 1.30 billion pounds in 1992.

"Nickel supplies are likely to exceed demand for many years unless output is cut by producers," Hunt predicted, noting that "how quickly this happens will depend upon the marketing strategies of the major producers." He added, "We will see low prices again, possibly averaging some $2.60 in 1992, but the average for the 1990s is forecast to be $3.80 in money of the day--in real terms $3.10."

For a complete copy of Hunt's presentation, circle number 460 on the Scrap Action Card.

Stainless Quality Concerns Discussed

The stainless committee meeting also featured a presentation by Marcel M.A. Gos, ALZ N.V. (Genk, Belgium), on how contaminants in scrap can cause problems for stainless steel makers. "More and more scrap dealers are blending in order to reduce the level of trace elements or to let low-grade alloys flow into the circuit," the melt shop manager observed. Steel producers can accept blended material, he said, but the mixing of different alloys should not be allowed to "deteriorate the homogeneity of the lot since this ... leads to big fluctuations in the production process."

Gos said that compared to a few years ago, the "cleanness" of recycled scrap has improved, but consumers must remain vigilant for contaminants. He said ALZ "feels the time has come to elaborate a ‘quality handbook' for stainless steel scrap. Its rigid application would help to avoid unpleasant and expensive experiences and become profitable to all parties."

Stainless steel scrap "will remain a valuable raw material in the future," he concluded, "but it will be a real challenge to everyone involved in this business to bring an improved and more attractive product.”

Debating Definitions

At the environment committee meeting, chaired by Michael C.E. Lion, Lion described efforts to define those materials that are generally not handled by the recycling industry but that are a worrisome part of the waste stream from an environmental impact point of view. The BIR favors the creation of a "blacklist," he noted, while the European Economic Community (EEC) prefers a "white list" defining those materials acceptable for handling outside waste stream regulations.

Lion said a blacklist of the "very very few items" handled by nonferrous recyclers that pose environmental risks would be "by far the best means of achieving sensible, satisfactory, and well-balanced controls." He added, "I cannot stress too strongly that the overwhelming majority of materials handled in nonferrous scrap recycling are safe materials and it is thus vital that transfrontier movement regulations take this consideration into account."

Representatives of the United Nations environmental program and the EEC were present at the meeting.

The BIR will work with the authorities to define the materials that are of concern, Lion noted, adding that he hoped that the EEC will recognize the "very genuine anxiety we have in this matter from a practical point of view.”

At the meeting, BIR representatives reported that the Organization of Economic Cooperation and Development (OECD), in drafting waste movement regulations, stated that "consideration must be given to making a distinction between recyclables and waste, bearing in mind the official BIR definitions."

However, in making his report on Eurometrec (an autonomous associate division of the BIR) at the nonferrous division meeting, Heinz-Werner Hempel, Roland Legierungsmet (Bremen, Germany), president of the group, said that the EEC will continue to consider scrap a waste. "Although Eurometrec members do not accept the EEC approach in this respect, we are afraid that--at the presentation time at least--we will have to live with that definition and to adapt ourselves to the situation, but make use of any other existing EEC regulations which could help us survive," he said. "It is very clear that the commission representatives seem to be quite open to our arguments and even share our points of view. However, it is also clear that they are bound by political decisions when they have to draft legislation."

Examining Textile Trade in Eastern Europe

At the textile division meeting, Thomas Gaiger, A. Martin Bunzl GMBH (Vienna, Austria), honorary president of the textiles division, said that in the foreseeable future Eastern Bloc countries will not have money for trade, but may be open to bartering. He said that there is talk of joint ventures in Hungary, Czechoslovakia, and Romania, but noted that their laws are confusing to Western businesses. In addition, he said, "If you want to sell to those countries, you will have to buy something from them." He concluded with a note of caution: "Be extremely careful in dealing with the Eastern Bloc countries."

Basel Worries Many

The Basel Convention "will significantly limit international trade in scrap and secondary metals and, in fact, in ashes and residues emanating from the p metals industry," Francis Veys, BIR secretary general, said at a press conference at the convention. He explained that the convention effectively states that the exporters of anything defined as "hazardous waste" will only be allowed to export to another country if disposal facilities are not available in their own countries and they can prove to their own governments that the importer has the proper treatment facilities. "A ban on the transport of these products," he concluded, "could ultimately lead metal producers in net scrap importing countries to switch back to primary raw materials." •