January/February 1994
At its landmark fall convention, the BIR did more than review the state of recycling markets worldwide--members voted to chart a new course for the international group’s future.
By James E. Fowler
James E. Fowler is publisher and editorial director of Scrap Processing and Recycling.
The fall conference of the Bureau International de la Recuperation (BIR) (Brussels, Belgium) did more than provide a forum for reviewing the changes--both real and hoped for--in international recycling markets. The event, held in Dusseldorf, Germany, in October, marked the birth of what will become the “new” BIR, as delegates voted overwhelmingly to approve a restructuring and development plan for the 45-year-old recycling organization.
One significant change under the new plan will be in the BIR’s membership structure, which previously gave voting rights only to delegates from national federations but which will be amended to give individual member companies a vote.
The BIR will also modify its dues structure, requiring national federations to pay approximately $1,400 per division by 1995 and charging individual companies about $1,000 for dues in 1994 and $1,400 in 1995.
In addition, the new plan enables the organization to expand it membership focus beyond its traditional scrap processors and brokers to include others such as primary producers, transporters, consumers, waste haulers, and service companies. With this change, the association, which had 400 company members in 1993, hopes to at least maintain this level of membership in 1994.
To encourage individual companies to retain their membership and prompt new ones to join, the BIR also decided to limit access to its conventions to representatives of member companies in good standing. Previously, any member of a BIR member federation, such as the Institute of Scrap Recycling Industries (Washington, D.C.), could attend the conventions. These events will also be revamped, with the spring meeting remaining a full-blown convention, while the fall meeting will be scaled down to a one-day trading session.
BIR President Jean-Pierre Lehoux of Federec (Paris) expressed his hope that the restructuring plan “will give the BIR the structural and financial means to act as the true world recycling federation.” The BIR’s statutes and bylaws will be changed to reflect these new plans at its general assembly meeting in Barcelona, Spain, this May, and the organization’s new structure is set to take full effect in 1994.
Ferrous Market Faces Good/Bad Scenario
Commoditywise, the brightest notes in Dusseldorf came out of the ferrous division meeting, with Edward Hollander of Clarendon Ltd. (Glenview, Ill.), a ferrous division board member, reporting on the strength of the U.S. ferrous scrap market and the extremely high demand for prime grades. With several U.S. mills planning new thin-slab casting capacity, Hollander predicted that “if all of the new announced projects are completed in the next five years, there could be demand for an additional 10 million tons of low-residual scrap.” Still, the question on everyone’s mind, he said, is: “Where will this scrap come from?”
In contrast, Japanese steel production was expected to decline in the second half of 1993, with scrap imports projected to be 90,000 metric tons (mt) lower during this period at approximately 350,000 mt, said John Crabb of Simsmetal Ltd. (North Sydney, Australia), a nonferrous division vice president. This production slowdown has prompted Japanese integrated mills to export pig iron at competitive prices, with 300,000 mt reportedly being scheduled for sale to Korea, Crabb said, adding that Korea continues to increase its electric-arc furnace capacity beyond its current level of about 10 million mt annually. That country, in fact, is expected to start three new furnaces by April, which could boost its scrap imports to reach between 4 million and 4.5 million mt per year, Crabb said. "Despite the slowdown in China and the continuing difficulties in Japan," he summed up, "the fundamentals for the time being still seem to be in place in Far Eastern markets for continued strong demand for our products."
Despite these few positive glimmers, Ferrous Division President Anthony P. Bird of the Bird Group of Cos. Ltd. (Stratford-upon-Avon, United Kingdom) cautioned that the "world steelmaking industry is suffering from greatly reduced margins caused by the problems in the motor car manufacturing and construction industries brought on by the world recession." As if to prove this point, S.M. Venkataraman of Metal Scrap Trade Corp. Ltd. (Calcutta, India) noted that 80 electric furnaces have closed in India and more are expected to be shut, which means that India's total scrap imports could fall to I million mt for all of 1993 "because of high prices and consequent low demand."
With this news and the persistent worldwide recession in mind, Bird spoke for many recycling executives by stating, "It is worrying ... to see our customers, who we must regard as partners in the steel industry, suffering from greatly decreased demand and margins for their products. I shall not feel content until the steel industry returns to profit, as without doubt our fortunes rest ultimately on the success of the steelmaking industry."
Nickel/Stainless Outlook Still 'Somewhat Pessimistic'
Stainless Steel and Special Alloys Committee Chairman Barry Hunter of Keywell Corp. (Port Elizabeth, N.J.) assessed the stainless market this way: "It would appear that all worldwide major consumers for the month of October had the same dollar-per-ton value on the buy side. It also would appear from our reports that this was almost identical to what we as merchants were paying for product for the glory of supply."
Stainless producers have had to melt at the highest capacity possible in order to produce on a low-cost basis, a situation that has brought about a dramatic decline in the price of finished products and a potential oversupply of material, Hunter explained. "Producers appear ready to make sales in just about any market in an attempt to cover the high Volume of production," he said. "This leads me to be somewhat pessimistic for our sector even with the recent price increase in nickel and the continued obvious strength of the steel market. A major reevaluation of long positions for finished and semifinished product could bring about further decreases in raw materials requirements."
Meanwhile, in the U.K. stainless market, consumer demand remained "remarkably steady" in the six months prior to October, said Austin Merrills of Ireland Alloys Ltd. (Hamilton, United Kingdom), and the demand outlook appears reasonable since no production cutbacks are anticipated in the immediate future. Stainless scrap was in short supply throughout the period, he said, partially due to reduced prices and partially to the continuation of the recession, which meant there has been less scrap available. Sourcing material to supply consumers in the much-reduced price scenario will be a continuing problem, Merrills noted, as will the shortage of stainless scrap.
In the United States, stainless demand has been exceptionally good, but scrap nickel is in short supply, according to a report prepared by Sidney Greenberger of National Nickel Alloy Corp. (Pittsburgh). In particular, he noted strong demand for nickel-chrome-iron alloys and nickel-chrome-molybdenum-iron, pointing out that requirements from the U.S. Environmental Protection Agency are creating an ever-increasing need for corrosion alloys. In addition, demand for hastelloys B and C has been constant, with demand exceeding supply.
In 1994, there could be in accelerating pickup in most areas, Greenberger asserted. If other Western nickel producers cut back production as Inco (Toronto) has, and if the Commonwealth of Independent States (C.I.S.) also cuts back, nickel pricing could escalate dramatically, allowing producers to recoup the losses they suffered in the past several years.
Superalloys, meanwhile, had a rougher road in 1993 on both sides of the Atlantic due to the downsizing of the military and aerospace industries, and they face bleaker prospects for recovery, with the best estimate for improvement being 1995, Greenberger said.
Nonferrous Blues Persist
For nonferrous processors, the 1990s could be remembered as the decade of little or no margin, asserted Larry Sax of Barmet Aluminum Corp. (Akron, Ohio), a nonferrous division vice president, at the nonferrous division meeting.
Given the level of aluminum stocks in London Metal Exchange (LME) (London) warehouses, he said, few North American processors expect world aluminum prices to rally soon. On the scrap side, the lack of some consumer interest and diminished export demand have combined to lower scrap values, and though material is in somewhat short supply, it is flowing to consumers at a rate that satisfies their needs, Sax said. As a side note, he pointed out that the nonferrous scrap market was also being affected by the late-1993 rebound of ferrous scrap, as recyclers who process both ferrous and nonferrous material turned their attention to meeting the high domestic and export demand for steel scrap.
For copper, world market fundamentals are not encouraging, Sax stated, but the near-term technical picture may get a little brighter, particularly in the United States, where consumption is holding up and where demand from brass and wire consumers is good enough to enable copper scrap sellers to move material.
On a more-upbeat note, domestic demand for zinc looks positive, he said, with consumption expected to increase 5 percent in 1994 based on growing demand for automotive-related galvanized steel sheet and zinc die cast.
Lead-acid battery scrap, on the other hand, remains competitive and smelter margins are virtually nonexistent, Sax reported. North American lead producers and consumers are hoping for a boost in demand during the winter battery season, which could bring about higher scrap prices--and, thus, good news--for processors as well, he said.
In Europe, the future of the nonferrous metals industry is nervous and unsure, said Robert Voss of Voss International Ltd. (Middlesex, United Kingdom), a nonferrous division vice president. "Legislation increases, markets decrease, stocks increase, and profits disappear," he explained, "For the second year running, many consumers, Producers, merchants, and traders are working for survival rather than the profit margins seen during the mid- and late 1980s. Frankly, no one knows when we are to climb out of this recession, but we all believe that the recovery will be slow, long, and hard."
Reporting on the Far East, Jeremy Sutcliffe of Simsmetal Ltd. (North Sydney, Australia) asserted, "We need a dramatic improvement in the Japanese economy, a drastic curtailment of C.I.S. exports, and an immediate and sustained return to the market by China before the nonferrous metal prices recover significantly." The gloomy state of the industry can be seen in the number of merchants who, instead of offering to sell metal to Simsmetal, are trying to sell their businesses to it instead, he noted. Still, Sutcliffe said, "although the outlook remains bleak in the short term, Asia will remain the world's most dynamic economic region for the rest of the decade and beyond."
Perhaps proving that assertion, the fall meeting featured the first report from a Chinese delegate, Jian Hua Bian of China National Resources Reclamation Corp. (CRRC) (Beijing). According to Bian, China has more than 4,000 companies in the materials and equipment recycling industry and more than 3,000 processing centers. Moreover, the CRRC has 41 domestic joint ventures and has established manufacturing and trading joint ventures in Thailand, Japan, and Hong Kong. While the recycling industry in China is developing rapidly, there are problems, Bian said, noting that there are 70 million tons of various recyclable resources produced each year in China, but only 30 percent are recovered. Even so, the CRRC managed to collect 1.36 million tons of scrap metals in the first half of 1993, he reported. •
At its landmark fall convention, the BIR did more than review the state of recycling markets worldwide--members voted to chart a new course for the international group’s future.