May/June 1993
After backsliding in 1991, the U.S. recycling rate for UBCs has resumed its upward climb despite persistent market problems in the aluminum industry. Steel cans, meanwhile, continued the upward trend recorded in recent years.
BY ROBERT J. GARINO
Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries (Washington, D.C.).
The results are in: The recycling rate of all-aluminum used beverage cans (UBCs) hit a new high last year, reaching 67.9 percent, according to a joint survey by the Institute of Scrap Recycling Industries (ISRI), Can Manufacturers Institute (CMI), and Aluminum Association—all Washington, D.C.-based associations. Last year was also a high-water mark for the UBC's steel beverage can cousin, which recorded a 50.4-percent recovery rate (see "Steel Can Recycling Scales New Heights" on page XXX).
For UBCs, the new record rate made 1992 a recovery year of sorts. After showing steady increases between 1986 and 1990, the UBC recycling rate dropped 1.2 percentage points in 1991 due to many factors, including depressed average prices, which apparently kept cans from entering the scrap stream. Although 1992 prices weren't much better, this 1991 supply backlog seems to have been released in the first half of 1992. In fact, independent analysts reported in mid-1992 that UBC consumption was up 14 percent compared with the first six months of 1991.
Market Clouds Persist
Despite the silver lining of UBC recycling, 1992 was predominantly dark and gloomy for the aluminum industry. (For a year-end summary of the aluminum market, see "1992 Commodity Wrap-Up," beginning on page 53.) While the North American aluminum industry fared better, demand-wise, than its European and Japanese counterparts, average aluminum transacted prices remained weak on the world market. With domestic primary metal prices approaching primary production costs, and with no letup seen in world supplies, profit margins at all levels of the aluminum industry were severely squeezed.
The estimated mill buying price east of the Rocky Mountains for baled aluminum can scrap started off 1992 at 32 cents a pound (fob shipping point) and increased to 44 cents by April 20—the high price for the year. (West Coast prices maintained about a 2-cent-per-pound discount compared with the rest of the country.) Primary aluminum prices also peaked in April, averaging 61 cents a pound for the month, according to Metals Week. Values for both UBCs and prime aluminum trended lower in the ensuing months, finishing the year at 37 and 55.5 cents a pound, respectively. Meanwhile, the UBC "street price"—the average price paid to collectors—hovered between 25 and 29 cents a pound throughout most of last year.
One effect of these weak prices was a slowdown in the collection and processing of old scrap—a situation compounded by a relatively low generation of new prompt scrap in 1992. In addition, some UBC collectors reportedly sat on can scrap, waiting for the domestic and export markets to firm. The net result for scrap recyclers was that they had to pay relatively high prices for aluminum scrap in relation to primary metal.
Three Producers Dominate UBC Market
Although recycling UBCs was perhaps less profitable in 1992 compared with other years, can sheet makers have created an efficient recycling infrastructure that ensures a steady flow of scrap, almost regardless of price. This reliable supply system, coupled with growing number of mandatory curbside collection programs, means that can recycling is far less sensitive to commodity market fundamentals than many would have guessed. In addition, even when primary producers pay relatively higher prices for UBC scrap, they realize an enormous energy savings compared with using its virgin counterpart. In fact, melting UBCs reportedly enables can makers to produce up to 20 times more cans for the same amount of energy.
According to ReMA estimates, three integrated aluminum producers reclaimed about two-thirds of the 62.7 billion UBC market in 1992: Alcoa Recycling Co. Inc. (Knoxville,Tenn.), Reynolds Metals Co. (Richmond, Va.), and Alcan Aluminum Corp. (Cleveland). Alcoa led the trio with a market share of around 31 percent, or slightly more than 19 billion cans. Reynolds claimed about a 19-percent share, recovering 12 billion cans, or 560 million pounds—a company record. And Alcan had an estimated 16-percent share of the UBC harvest, taking in about 10 billion cans.
OF course, domestic aluminum sheet mills like these big three aren't the only ones consuming the United States's UBCs (though they do account for more than 90 percent of the 2.142 billion pounds melted in 1992, ReMA estimates). The remaining UBCs are melted by secondary aluminum smelters, exported to foreign consumers, or used in "nonrecoverable" applications such as steel deoxidizing, metal coating, thermic reduction, explosives, and chemical manufacturing.
Lightening Up
Among the many rising numbers in the UBC industry, the number of cans per pound also continues to go up, reflecting the industry's ongoing efforts to "lightweight" the standard aluminum can. In the early 1970s, it took 21.75 cans to make a pound, but today it takes approximately 29 cans to reach the pound mark—a 26-percent weight reduction. (See table on page below.)
Lightweighting looks to be a continuing trend in the 1990s, as major can manufacturers push new research efforts. American National Can Co. (Chicago), for example, recently introduced a can that features a smooth neck, fluted sidewall, and reformed bottom. This new design reportedly cuts another 10 percent off the weight of current standard cans. And Anheuser-Busch Cos. (St. Louis) has begun using a smaller lid on its cans, a move that could reduce its aluminum consumption by 20 million pounds a year.
Steel Can Recycling Scales New Heights
The aluminum can industry isn't the only one setting recycling records these days. The U.S. steel industry has also registered impressive recycling gains in recent years, not only reclaiming more steel beverage cans, but also increasing the recycling rate for all steel containers, including aerosol and paint cans.
In 1992, the steel industry achieved a 50.4-percent recycling rate for steel beverage cans and a 40.9 percent rate for all steel containers, according to the Steel Can Recycling Institute (SCRI) (Pittsburgh). This latter figure is 6.9 percentage points higher than the 1991 rate of 34 percent and equates to more than 1 million tons of scrap steel purchased for reuse. SCRI 's goal is to help steelmakers reach a 66-percent steel container recycling rate by the end of 1995.
The importance of achieving and maintaining a high recycling rate was driven home to the steel container industry recently in Florida . The state's 1988 Solid Waste Management Act mandates that, effective July 1, an advance disposal fee of 1 cent per container will be assessed on all containers that were not recycled at a sustained rate of 50 percent as of October 1992. SCRI proved that 51 percent of steel cans are recycled in Florida , winning steel can makers an exemption from the fee. Aluminum containers are also exempt, while glass and plastic containers are not, indicating the potential effect such a fee can have on competition and market share among different containers.
On another competitiveness issue, steel can manufacturers—like their cohorts in the aluminum industry—have also been lightweighting their containers over the years, with today's bimetal cans being reportedly 40-percent lighter than comparable cans in 1970. In addition, the amount of tin used in steel cans has dropped in the past five decades from 50 pounds per ton of tin plate to a current average of 6 pounds. —R.J.G.
UBC Recycling Rate History
Year Percent Recycled
1982 46.5%
1983 50.0%
1984 51.3%
1985 50.5%
1986 47.1%
1987 50.5%
1988 54.6%
1989 60.8%
1990 63.6%
1991 62.4%
1992 67.9%
Sources: 1982-1986, National Association of Recycling Industries (now part of ISRI); 1987-1992, ISRI, CMI, and Aluminum Association.
UBC Recycling Rate Calculation
1991 1992 Change
Total UBC Consumption1 1.97 billion 2.14 billion +8.8%
(pounds)
Cans per Pound 28.87 29.29 -1.5%
Number of Cans 56.85 billion 62.74 billion +10.4%
Reclaimed
Number of New Cans 91.16 billion 92.36 billion + 1.3%
Shipped2
UBC Recycling Rate 62.4% 67.9% +5.5%
points
Note: Figures have been rounded.
1 Includes cans melted and consumed domestically plus exports.
2 12 months, October 1990-September 1991 and October 1991-September 1992.
Aluminum Can Weight
Selected Years Number of Cans
Per Pound of Aluminum
1972 21.75
1978 23.65
1983 25.70
1988 28.25
1992 29.29
Source: Aluminum Association.
Steel Container Recycling Rate
Year Scrap Steel Containers Steel in Containers Steel Can Purchased Delivered to Fillers Recycling Rate
(tons) (tons)
1989 453,900 2,536,000 17.9%
1990 616,500 2,506,000 24.6%
1991 971,400 2,854,900 34.0%
1992 1,135,300 2,775,000 40.9%
Source: SCRI.
After backsliding in 1991, the U.S. recycling rate for UBCs has resumed its upward climb despite persistent market problems in the aluminum industry. Steel cans, meanwhile, continued the upward trend recorded in recent years.