July/August 2008
A great location, record attendance, solid scrap markets, and even more evidence about the environmental value of recycling made BIR's 60th anniversary convention a grand success. By Robert J. Garino and Kent Kiser
Take the white light of a diamond, signifying this year's diamond 60th anniversary of the Bureau of International Recycling. Add azure blue to match the sky and water of the Côte d'Azur, site of BIR's gala convention. Throw in a flourish of green to represent the environmental focus of many of the meeting's presentations as well as the monetary windfall that many scrap recyclers have enjoyed in recent years, and you'll have the basic palette of BIR's spring convention, held in early June in Monte Carlo.
BIR certainly had plenty to celebrate this year, including its 60th birthday and record convention attendance of about 1,300 delegates and guests. Those attendees also had ample reasons to celebrate, including generally hot scrap markets, a gorgeous meeting location, and a memorable BIR anniversary party that included a champagne reception in the gardens of the Monte Carlo Sporting Club, laser-light show, Gypsy-music concert, banquet, and fireworks.
The BIR convention also was the group's "greenest" meeting to date in terms of its subject matter, with several speakers noting the important role of recycling in saving energy, reducing carbon dioxide emissions, and helping the world combat global warming. One speaker—Henrik Harjula of the Organization for Economic Cooperation and Development (Paris)—asserted that recycling "is becoming more and more important all the time" given that population growth will increasingly strain the world's environment and natural resources. He noted the beginnings of a paradigm shift from cradle-to-grave product management to cradle-to-cradle, with activities already targeting sustainable materials and closed-loop material cycles. "Recycling will be key in this transition to a new material economy," Harjula said.
Such was the tone—celebratory and reflective—at BIR's anniversary convention, which helped attendees envision the future of the association and the industry in decades to come. Here are highlights of the environmental and market reports offered in Monte Carlo.
Getting a Grip on Global Warming
The problem of global warming "starts with people, and it ends with people," said keynote speaker Nicholas Stern, Baron of Brentford, an economist, academic, and author of The Stern Review: The Economics of Climate Change. Through daily activities that consume fossil fuels, people emit "greenhouse" gases, most notably carbon dioxide. Those emissions accumulate in the atmosphere, trapping radiant energy that raises the Earth's temperature and causes climate change, with direct consequences to people around the globe. "The argument about the problem and the scale of the problem is over," Stern said. "What really matters is what we can do."
The world can avoid the worst effects of climate change by making substantial reductions in greenhouse gas emissions, Stern said. Those emissions have risen steadily since 1850, when scientists started recording such statistics. In that year, Earth's greenhouse gas emission stocks were at 280 carbon dioxide-equivalent parts per million molecules of air. Today, the level is around 430 ppm, and that level is growing 2.5 ppm per year. If countries do nothing for the rest of this century, Stern said, the carbon dioxide stock level could increase 300 to 400 ppm, reaching a total level of 730 to 830 ppm. At that level, he said, "we would have a 50/50 probability" of making the planet 5 degrees C hotter than in 1850—a temperature the Earth has not seen in 30 million years.
That kind of temperature change would have the biggest impact on the movement of water, Stern said, creating droughts in some areas and coastal flooding in others. "This completely redraws where you can live," he said. "It would involve massive movement of people." Earth is already 0.8 degree C above its 1850 temperature, and human activity likely will add "another 2 degrees C above that even if we act very sensibly as a world," he said. "Adaptation is going to be crucial. We will have to adapt to a few degrees of change, but we're trying to avoid the repercussions of increasing 4, 5, 6 degrees C, which would transform the world."
To prevent such cataclysmic changes, Stern said, nations must pursue a low-carbon growth strategy to stabilize the world's carbon dioxide stocks at around 500 ppm. To get there, countries must cut their current greenhouse gas emissions of 42 gigatons per year 50 percent by 2050. At that level, the probability of the Earth's temperature rising more than 5 degrees C is only 3 percent, which represents "a massive reduction in risk," Stern said. "It's an incredibly good insurance policy." Such a move would cost 1 percent or 2 percent of global GDP, which is "a significant amount of resources, but it doesn't stop growth. What stops growth is ignoring the problem."
To achieve the 50-percent reduction by 2050, developed countries would have to take the lead and bear more of the initial burden, cutting their emissions 80 percent, because they are responsible for about 70 percent of the current carbon dioxide stocks in the atmosphere, Stern said. Before asking developing countries to trim their emissions, rich countries must show that low-carbon growth is possible, establish a workable carbon emissions trading system, and share technology, he said.
Other keys to minimizing carbon dioxide stocks include reducing deforestation, which is responsible for about 20 percent of the world's carbon emissions, and delivering on overseas development assistance commitments, Stern said.
Individuals and industry can't solve the global warming problem on their own, he asserted. Governments must develop and promote the right kinds of environmental policies and "get the incentives right—through taxes, emissions trading, and regulations," he said.
Stern also noted that boosting recycling is a great way to quickly reduce energy demand and improve energy efficiency. Already, he said, the global recycling industry saves 500 million mt of greenhouse gas emissions each year, valued at more than $20 billion (at $40 per ton of carbon dioxide equivalent). "The contribution that you are making is enormous," Stern said. You have a splendid story tell, and I would encourage you very strongly to tell it."
Several other speakers at the BIR convention echoed Stern's praise of the recycling industry's environmental contributions. One recent study by Imperial College (London) supported Stern's claim that recycling saves more than 551 million mt of carbon dioxide emissions each year, reported Roger Brewster of Metal Interests (Chichester, England). The study based its findings on 2006-2007 worldwide production figures for seven metals—aluminum, copper, ferrous, lead, nickel, tin, and zinc—and paper, concluding that their carbon savings by the use of recycled materials are equivalent to 1.8 percent of global fossil fuel emissions. At the Ferrous Division meeting, Mika Saariaho of the International Iron and Steel Institute (Brussels) offered an even grander statement, maintaining that steel recycling alone saves some 900 million mt of carbon dioxide emissions annually.
Focusing on the paper recycling sector, Holger Alwast of Prognos (Berlin) reviewed the results of a study on the potential benefits of paper recycling in terms of resource savings and carbon dioxide emission reductions. Identifying a carbon dioxide savings of 840 kg per mt of paper recycled, Alwast suggested that a more ambitious approach to waste management and recycling as a whole could help Europe achieve between 16 percent and 27 percent of its emission reduction targets for 2020.
The green theme continued in the Plastics Committee meeting, where the group's chairman, Surendra Borad of Gemini Corp. (Antwerp, Belgium), suggested that "plastics recycling reduces carbon emissions and therefore is eligible for carbon credits." Plastics manufacturing consumes 8 percent of world oil resources, he explained, and every metric ton of plastic that's recycled saves 1.8 mt of oil and prevents 0.77 mt of greenhouse gas emissions. Thus, plastic recycling is "theoretically" eligible for carbon credits of about k8 per mt based on a k10 price of certified emissions reductions, Borad said. "This will give a good boost to recycling, so we must do our best to make plastics recycling eligible for carbon credits."
| BIR Celebrates 60 Years of Success
"Once upon a time...BIR created a unified recycling world." Thus begins The Story of BIR, a condensed history of the international trade group it published in honor of its 60th anniversary, which it celebrated at its spring convention this year in Monte Carlo. As the book notes, leading recyclers from Belgium, the Netherlands, and Luxembourg gathered at the Amstel Hotel in Amsterdam on March 18, 1948, to mark the 125th anniversary of Dutch recycling company B.J. Nijkerk. After the reception, Bob and Hugo Nijkerk—two directors and owners of the scrap company—suggested to their guests that they should form a Benelux recyclers association and use that group to develop a wider international recycling organization. That decision laid the foundation for the first transboundary recycling organization, known today as the Bureau of International Recycling. The fledgling group held its first official meeting in June 1948 at the Amsterdam Carlton Hotel, where it appointed French recycler Emile Savigner as its first president and Dutch solicitor Jaap Caron as its first secretary-general, working from Amsterdam. The association decided to hold two meetings a year—in spring and fall—and to move the meetings to different cities in keeping with its international focus. In 1951, BIR moved its headquarters to Paris when Jacques Valton, secretary of the French recycling federation, became secretary-general. In 1971, BIR moved its headquarters once again, to Brussels, seat of the European government and home to a growing number of international organizations, and it named Marcel Doisy secretary-general. Doisy retired in 1981 and was succeeded by Francis Veys, a lawyer specializing in international matters and Doisy's right-hand man for the previous six years. Throughout the 1980s and 1990s, BIR protected and promoted recycling on a steadily larger scale, helping it become a highly recognized activity," according to The Story of BIR. The association also addressed trade issues related to international agreements such as the Basel Convention and OECD rules. More recently, the association has worked to promote the recycling industry's invaluable and significant contributions to sustainable growth, the reduction of greenhouse gas emissions, and resource conservation. Today, BIR still calls Brussels home, and Veys continues to lead the group as director general, supported by a staff of seven. From its small beginnings, BIR now boasts more than 750 company members and 41 national member federations (including ISRI) from more than 70 countries. As The Story of BIR puts it, The founding fathers could not have hoped—even in their most optimistic dreams—that the infant BIR would have evolved over the ensuing 60 years into a global organization comprising the great majority of industrialized countries active in recycling." |
Ferrous Hits 'Unbelievable' Heights
What a difference six years can make. When BIR last met in Monte Carlo, in May 2002, No. 1 HMS was around $96 a ton. In mid-May this year, it touched $519 a ton—about 5.4 times the 2002 level, noted Ferrous Division President Christian Rubach of Interseroh Hansa Recycling (Cologne, Germany). Such "unbelievable" scrap prices reflect burgeoning global crude steel production, which the International Iron and Steel Institute (Brussels) forecasts will surpass 1.4 billion mt in 2008 and 1.5 billion mt in 2009. According to IISI's Saariaho, global steel production likely will continue growing 3 percent to 5 percent a year.
Similarly, apparent steel use is expected to rise strongly in the coming two years, with the BRIC nations—Brazil, Russia, India, and China—"leading the growth," along with the six Arab states of the Persian Gulf, which have more than $2 trillion of construction projects in the works, Rubach said. "The enormous demand for construction steel associated with these projects will result in big requirements for steel scrap within the next few years," he stated.
The steady growth in electric-arc furnace capacity "on nearly all continents, particularly in Russia, Ukraine, Poland, Germany, the Middle East, Turkey, India, and Vietnam," also is boosting the demand for ferrous scrap, which means the "supply of scrap will remain tight," Rubach said. Saariaho concurred, noting a "scrap challenge" ahead as the rate of obsolete scrap availability grows more slowly than crude steel production, resulting in less scrap available per ton of steel produced. Scrap's share in the global steel melt has fallen from 49 percent in 1975 to 36 percent last year, he said. Much of that decline is traced to China, where most steel is produced using iron ore in blast oxygen furnaces rather than scrap-based EAFs.
Looking closer at key steel-producing regions, Anton van Genuchten of TSR Recycling (Bottrop, Germany) reviewed steel fundamentals in the EU 27, which consumed 88 million mt of purchased ferrous scrap in 2007 in the process of producing more than 210 million mt of crude steel, up 1.6 percent from 2006. EAFs accounted for almost 43 percent of that production, increasing from a 40-percent share in 2006, he noted.
Scrap's share of total production has grown within the EU 27 despite rising exports of scrap and diminished imports. Last year, the region exported 10.6 million mt of ferrous scrap, up almost 5 percent from 2006, and imported 5.1 million mt, down almost 30 percent, yielding an export surplus of 5.5 million mt, van Genuchten said. Turkey was the biggest buyer of EU ferrous scrap, at almost 6 million mt; major scrap suppliers to the EU 27 included Russia as the largest provider followed by the United States, Switzerland, and Norway, he said.
Despite scrap prices that increased 110 percent in the past five months (No. 1 HMS and No. 2 HMS, f.o.b., Rotterdam), the highest scrap prices in 2008 will occur during the second half of the year, Van Genuchten said, in part because there's "not much obsolete scrap laying around or being stocked."
The U.S. ferrous scrap market also is strong, said Blake Kelley of Sims Global Trade (New York), who expected higher prices for prime scrap grades in June and drifting prices for obsolete grades. Pig iron and hot-briquetted iron are an uninteresting alternative," he said, because their prices are much higher on a value-in-use basis."
Kelley acknowledged "obvious concerns" about the U.S. economy tied to high energy costs, reduced real estate values, and declining consumer confidence. At the same time, he asserted that the domestic economy "is not as important as it once was in the macro world" as other economies gain traction, providing opportunities for us all." Looking ahead, the current high rates of global steel production and raw material consumption will continue, and market fundamentals should stay very firm," Kelley said. As both he and Van Genuchten noted, steel consumers will determine the length and strength of the current wave of high steel demand. There's only one factor that can stop this demand for steel and, therefore, scrap—the consumer," Van Genuchten stated.
Turning to India, Ikbal Nathani of the Nathani Group of Cos. (Mumbai, India) noted that Indian steelmakers reduced their selling prices in stark contrast to the rising steel price trend around the world. Also, the Indian government cut its import duty on ferrous scrap from 5 percent to zero. India's annual steel production is expected to reach 280 million mt by 2020, a huge jump from its current output of about 56 million mt, Nathani said.
In the Russian and Ukrainian markets, exports of ferrous scrap likely will continue to decrease due to rising EAF capacity in the domestic market and a lack of investment in port infrastructure, said Roman Genkel of Mair Industrial Group (Moscow). Russia could also increase its export duties on ferrous scrap from k120 to k 200 per mt, further hindering exports.
| EU Tire Recycling Grows Steadily
The EU 15 nations recovered about 2.5 million mt of scrap tires in 2006, giving them an overall recovery rate of 89 percent, reported Tires Committee Chairman Barend Ten Bruggencate of KCL (Alkmaar, Netherlands). Of that total, 107,000 mt (4 percent) went to reuse, 175,000 mt (6 percent) was exported, 332,000 mt (12 percent) went to retreading, about 1 million mt (37 percent) ended up in material-recovery applications, and 845,000 mt (30 percent) was burned for energy, he noted. The remaining 285,000 mt (10 percent) was discarded or ended up in unknown uses. The recovery rate was slightly lower for all of Europe, which recovered 2.8 million mt of scrap tires in 2006 for an overall recovery rate of 87 percent, Ten Bruggencate said. The proportion that went to each reuse and recovery market was similar to that seen in the EU 15, including about 1.1 million mt (34 percent) for material recovery and around 1 million mt (32 percent) for energy recovery, he noted. Tire stockpiles in the EU 27 nations totaled 5.5 million mt in 2006, equivalent to 1.73 times the total scrap tire generation in 2004, Ten Bruggencate said. |
No More 'Cheap' Nonferrous Scrap
Though scrap recycling remains a cyclical business, demand for nonferrous scrap from newer economies has sustained the current positive cycle and formed the basis for a more prolonged structural change that will affect scrap recycling for a much longer period, said Nonferrous Division President Bob Stein of Alter Trading (St. Louis). As a result, he maintained that the era of cheap scrap has long passed," with the overall scrap supply held in fewer hands to meet the growing global demand. The supply side of the industry, he said, will dominate its economic model for years to come."
Looking ahead, Stein conceded that for the first time since 2001, the economic outlook is less than stellar." The United States, he said, is probably" in a recession, with expectations of minimal growth in the coming year. As evidence, he cited an uncertain credit market, inflationary risks, nonperforming housing loans, high crude oil prices, and a lackluster" automotive market, which all have contributed to an economic downturn that has touched the entire world. This cycle will eventually end," he said, but it will result in a change in the flow of metals to the expanding, healthier economies of the world."
Offering a concise view of world nonferrous markets, Paul Coyte of Hayes Metals (Auckland, New Zealand) agreed that the U.S. economy remains in the doldrums, as does the South African metal market due to ongoing power problems. China is dealing with both power issues and the recent earthquake in Sichuan, which has disrupted lead and zinc production there, he said.
On a more positive note, the markets in India and the Middle East appear to be faring well," Coyte said, as are the markets in the Nordic countries, Russia, Germany, and Australasia.
Providing a closer look at India, Ujjwal Munjal of Rockman Industries (Ludhiana, India) asserted that the country's nonferrous industry has immense" potential. The country's per capita consumption of nonferrous is low, he said, but with India's large population, even a small increase in per capita consumption will have an almost immediate effect on metals markets. He recognized underinvestment in the metalworking industries as a supply constraint but sees new vistas" for growth based on India's increasing urban infrastructure needs.
Departing from the Nonferrous Division's market reports, Martin Abbott of the London Metal Exchange (London) discussed the role of the LME in volatile markets. The LME exists as a vehicle for users to manage financial risk and a means for price discovery, Abbott said. The exchange is not in the business to be a physical market, he stressed. Instead, it offers crossover services" to its customers, including the ability to price a commodity, warehousing services, recognition of the seller's brand, and inventories that enable buyers and sellers to gauge market fundamentals, thereby keeping prices credible.
In Abbott's view, volatility is inherent in commodities," noting that several non-exchange-traded commodities such as cobalt, molybdenum, and ferrochrome are equally or more volatile than exchange-traded products. This volatility, he said, is due in part to the fact that there was virtually no investment in metals in the 1990s, just as the biggest economic expansion was beginning. Thus, there are fundamental reasons for the volatility, and the role of investment funds and speculators was vital to help smooth" the price volatility, he said.
Abbott concluded by noting that the LME's new steel billet contract is enjoying success. Over time, he sees the potential for steel scrap to be linked to the steel billet contract price, similar to today's situation with copper scrap and the LME copper contract. The LME also is a long way down the road" with its very serious study" on introducing cobalt and molybdenum contracts, Abbott said, adding that the LME will make an announcement on this in the coming months.
Thomas Tumoscheit of Alcoa Europe (Geneva, Switzerland) wrapped up the Nonferrous Division meeting by reviewing Alcoa's global scrap buying trends, noting that its scrap purchases (including tolling by others) have risen from 686,000 mt in 2004 to about 1.1 million mt in 2007, an increase of 56 percent.
Globally, recovered aluminum—including both customer returns and postconsumer metal—accounted for approximately half of the 68.8 million mt of ingot produced worldwide in 2006, Tumoscheit reported. Some 8 million mt of aluminum was lost, however, due to the metal's use in deoxidation, catalyst applications, packaging, and consumer durables, he said.
| BIR Recognizes Three Recyclers
At the Paper Division meeting, BIR named Dominique Maguin (center) of La Compagnie des Matières Premières (Paris) as the recipient of its first award for lifelong contributions to the paper recycling industry. Maguin, a longtime president of the Paper Division, currently serves as BIR president. BIR Director General Francis Veys (left) and current BIR Paper Division President Ranjit Baxi of J&H Sales International (right) presented the award, which the Paper Division will bestow annually at BIR's spring convention. The association will give a similar award to an organization or a corporation at its fall meeting each year. At the Monte Carlo convention, BIR also honored Anthony Bird of the Bird Group of Cos. (Stratford-Upon-Avon, England) and Alfred Nijkerk with lifetime honorary memberships for their contributions to the association and the industry. Bird has served in many capacities within BIR over the years, including four years as president, from 1995 to 1999, and most recently as treasurer. Nijkerk worked in the scrap metal industry for years before becoming a trade journalist and freelance writer whose work includes co-authoring The Handbook of Recycling Techniques. Nijkerk also holds the distinction of being the only recycler still alive who was present at the creation of BIR in 1948. |
Better Weather Ahead for Stainless?
The forecast for the global stainless steel market is "mostly sunny with local showers," said Markus Moll of Steel & Metals Market Research (Reutte, Austria) at the Stainless Steel & Special Alloys Committee meeting.
Before looking ahead, Moll provided an overview of the $90 billion stainless market, noting that global production grew an average of 6 percent a year from 1950 to 2008. World stainless steel ingot equivalent production totaled 27.7 million mt in 2007, down 2.4 percent from 2006, he said. This year, he expects production to hit 28.8 million mt, an increase of 4 percent. China's stainless production will continue to show the fastest growth at about 7 percent this year—though that's a significant slowdown from its 36-percent gain in 2007. Production in other Asian countries will grow almost 4 percent, to 7.4 million mt, followed by the United States (up about 3 percent, to 2.7 million mt) and Europe (up 2.6 percent, to about 8 million mt).
In terms of consumption, China is the top market now; in fact, and six of the top 10 biggest markets are now in Asia, including Japan, India, and South Korea, Moll said. By 2012, total world stainless consumption will hit 35 million mt and China will still dominate the market, Moll said. By that point, Turkey will have moved into the list of top 10 stainless consumers, displacing Canada, he added.
The industry's destocking phase in 2007 slashed more than 1.3 million mt from inventories, but that phase is now over, Moll said. Substitution, another notable trend in the past year, is slowing down, and the cost advantage of alternatives to austenitic stainless grades is shrinking, he said.
For 2008, Moll offered this stainless market weather forecast—local showers in Japan, South Africa, and the United States, where stainless consumption will decline compared with 2007; partly sunny in the EU and China; and mostly sunny in Eastern Europe, Australia, and Latin America.
In the U.S. market, there's "a very significant volume of stainless scrap being exported," with 2007 exports officially reported at 880,000 mt but private estimates pegging the total closer to 750,000 mt, said Barry Hunter of Hunter Alloys (Boonton, N.J.). About 85 percent of U.S. stainless scrap exports went to Asian markets, with Taiwan the top buyer at 42 percent, China claiming second place at 25 percent, followed by India, Japan, South Korea, and Hong Kong. A "significant portion" of the volume exported from the West Coast originated on the East Coast, Gulf Coast, or Canada and was shipped cross-country in containers, allowing East Coast domestic wholesale scrap suppliers to "bypass their historic markets," Hunter said. This caused tight scrap market conditions for U.S. stainless mills, which had drawn down their scrap stocks at the end of 2007. In response, wholesale scrap prices "greatly escalated" as "buyers competed for individual truckloads of scrap everywhere," he said, asserting that "prices offered and paid for scrap often appeared unrealistic."
The U.S. market changed dramatically after the first quarter of 2008, however. China buyers "all but disappeared," Hunter said. Container freight rates to all destinations increased. Recyclers started shipping "huge volumes" of ferrous scrap in containers, greatly affecting container scheduling and availability. As a result, he said, domestic mills "are able to purchase their scrap needs on a monthly basis now without too much concern for availability and excessive competition." In addition, the LME is apparently reacting to supply-and-demand fundamentals as more nickel and ferronickel come on stream at a time when demand seems somewhat limited, he said.
On the supply side, the U.S. economic slowdown will reduce the availability of prime industrial stainless scrap, while obsolete scrap reserves have been drained thanks to the high scrap prices of the past few years. "The general lack of scrap, the continued impact of chrome and iron, and the eventual need for material in China may well rekindle the international competition for stainless steel scrap," Hunter said. He called on all players in the market to stabilize market conditions to "lessen dramatic changes, which unfortunately tend to be a way of life in our industry."
Offering a summary of key European stainless markets, Michael Wright of ELG Haniel Metals (Sheffield, England), chair of the Stainless Steel & Special Alloys Committee, noted that German stainless production declined 15 percent in 2007, to 1.5 million mt, with the biggest loss in austenitic grades. Germany's exports of stainless scrap increased 13 percent last year, to 805,000 mt, against its scrap imports of 350,000 mt, making it "an important exporter of stainless steel scrap."
In Italy, after a strong production decrease last year, stainless production rates have returned to previous levels, though all further planned production increases have been tabled and there's strong uncertainty and variability in production from month to month, Wright said. Italy's stainless scrap demands are closer to balanced now, with exports roughly matching imports. Stainless scrap prices, meanwhile, were affected by a decrease in the nickel price, an increase in the chrome price, and an increase in the ferrous scrap price, he noted. High ferrous scrap prices are prompting small and midsized Italian scrap dealers to focus on ferrous scrap but "neglect and stock" stainless scrap, thus reducing quantities available on the market.
Stainless production in the United Kingdom declined 6 percent in 2007, to 350,000 mt, but 2008 production is forecast to increase 13 percent, to almost 400,000 mt, Wright said. Though UK demand for stainless scrap was healthy in the first half of this year, there are now worrisome signs for the coming months. "In general," he said, "Europe is entering a cautious phase. Stockists are working from hand to mouth and are reluctant to hold high inventories in view of uncertain nickel prices and exploding chrome and iron prices." The recent fall in nickel prices, however, could act as a catalyst to prompt mills to increase their scrap inventories.
Russia continues to export stainless scrap but at steadily lower levels, reported Ildar Neverov of TYOR Commercial (Moscow). In 2005, for instance, Russia exported 320,000 mt of stainless scrap, but its shipments declined to 286,000 mt in 2006 and about 200,000 in 2007. Though Russia continues to levy a 15-percent duty on stainless scrap exports, international prices are high enough to still allow such shipments, he observed. As exports decrease, Russia's domestic consumption of stainless scrap is increasing, Neverov said, noting that the country's stainless production was about 109,000 mt in 2007 against its consumption of 285,000 mt. To meet its demand for stainless, Russia must import metal, mostly from China, Brazil, Taiwan, South Africa, South Korea, and India, he said, adding that the country imposes import duties on stainless from EU countries, he said.
Greater Paper Recovery Needed
Recovered paper "is not waste, and it is not to be wasted," stated Ilpo Ervasti of Pöyry Forest Industry Consulting (Vantaa, Finland), who provided an overview of the global paper recycling situation at the Paper Division meeting.
In the past decade—from 1995 to 2006—recovered paper has increased its share in the papermaking fiber mix, going from 40 percent to 50 percent, while the volume of recovered paper consumed worldwide has grown from 117 million mt to 194 million mt in the same period, Ervasti noted. "Recovered paper is the most important raw material in the paper industry," he said, noting that future challenges regarding virgin pulp resources will make it imperative to increase scrap paper recovery.
As paper recycling grows, the main consuming region is shifting from the "Old World" countries—mostly North America and Europe—to New World" countries in Asia and the Arabian Peninsula, especially China, Ervasti said. Offering some statistics on this trend, he reported that in 1995, three regions had almost equal levels of recovered paper usage—North America, 29 percent; Western Europe, 27 percent; and Asia (including China), 34 percent. As of 2006, however, North America's share slipped to 19 percent and Western Europe's share declined slightly to 24 percent, but Asia's share jumped to 47 percent thanks to China's meteoric growth from 7 percent to 22 percent, he said.
To keep paper recycling growing, more fiber must be recovered, though Ervasti expressed concerns about how much more volume can be collected. In his view, 70 percent will be the maximum achievable collection rate around the world, though individual countries are already exceeding that level. North America and Western Europe will find it difficult to increase collection because the easy sources are already tapped, they face high labor costs, and—in the United States, at least—people don't think that recycling is important, he said. Asia already faces a fiber shortage and has a limited reservoir of domestic scrap paper, while Eastern Europe lacks the collection infrastructure and population density to make paper recovery efficient and economical.
Rising energy prices pose another threat to paper recovery, Ervasti said. Paper has great energy value, he explained, with 2.5 tons of recovered paper having the same energy value as 1 ton of oil, 1.6 tons of coal, and 2.2 tons of wood. As energy prices rise, more people might use recovered paper for energy generation, he said.
In the end, Ervasti said, the collection of recovered paper is highly dependent on local issues such as legislation, public attitudes, and collection practices. The collection method also determines the usability of the recovered fiber, with paper that's collected separately more marketable as a raw material than commingled material, which is more likely to be used for energy generation.
The Paper Division meeting also offered updates on key markets around the world, with Ranjit Baxi of J&H Sales International (London)—the division's new president—examining the biggest market of all, China.
China's imports of scrap paper increased 15 percent in 2007, to 22.6 million mt, and that trend is continuing in 2008, Baxi reported. In the first quarter, China imported 5.9 million mt of scrap paper, up about 8 percent compared with the first quarter of last year. The United States was the largest shipper to China at 2.8 million mt—a 47-percent share—in the first quarter, followed by Europe at 1.9 million mt (32 percent), Asia at about 1 million mt (17 percent), and Oceania at 227,000 mt (4 percent), he said.
Within Asia, Japan is the largest scrap paper supplier to China, shipping about 65 percent of Asia's scrap paper (669,000 mt) in the first quarter, Baxi said. Within Europe, the United Kingdom is the largest supplier to China, accounting for 36 percent—or 685,000 mt—of European scrap paper exports, followed by the Netherlands (24 percent), Belgium (10 percent), Germany (8 percent), Italy (8 percent), Spain (5 percent), and France (5 percent).
China's paper and paperboard production is expected to surpass 100 million mt by 2014, Baxi said, and its demand for recovered fiber should continue to grow more than 8 percent to 10 percent a year.
While overall Asian demand for recovered fiber remains strong, freight increases and currency fluctuations are making it more difficult to sustain fiber exports, Baxi said. In addition, the economic slowdowns in the United States and Europe are affecting Asian exports of consumer products, resulting in reduced consumption of packaging paper.
Those slight setbacks aside, Baxi noted that anticipated closures of pulp mills and tax increases on exports of wood chips from Russia and other countries should keep demand for scrap paper firm in the coming years. •
Robert J. Garino is director of commodities for ISRI, and Kent Kiser is publisher and editor-in-chief of Scrap.
A great location, record attendance, solid scrap markets, and even more evidence about the environmental value of recycling made BIR's 60th anniversary convention a grand success.