Recycling Over Time

How has scrap consumption of key metallic and nonmetallic commodities fared in the last decade and a half? The charts presented here offer the answers on the domestic front.

By Eileen Zagone

Eileen Zagone is editorial associate of Scrap Processing and Recycling

When scrap recyclers discuss commodity activities, the focus is usually on what happened last week, last month, or last year, and, of course, what is expected for the future. But it is also valuable to take a longer-term look back at market activity to get a better feel for just how much things have changed—or stayed the same.

The graphs featured here offer just such a view, presenting a historical look at the annual U.S. market share achieved by eight scrap commodities—aluminum, copper, iron and steel, lead, nickel and stainless steel, paper, plastics, and zinc—calculated by dividing domestic scrap consumption for a given year by the total domestic consumption of that commodity during the same period. With the exception of plastics, the data presented offers a retrospective of these markets over the past 15 years.

Why Things Were the Way They Were

While these graphs illustrate what has been happening in the domestic scrap markets, the explanations of why come from industry experts.

For aluminum, one of those experts is David Moison, service director of the light metals department of Resource Strategies Inc. (Exton, Pa.), who points to the 1980s as one of the “most interesting” periods in that metal's market. As overall demand for aluminum grew during the decade, there was a dramatic increase in scrap aluminumconsumption, he notes. Thus, despite higher overall demand, primary aluminum consumption experienced no long-term growth, he explains.

Much of the growth on the scrap side can be credited to the rise in UBC recovery, Moison notes. More recently, however, he adds, the rate of growth in UBC recycling has slowed, and many industry analysts believe the rate may be approaching a practical maximum. "Eventually, this segment of the market can only grow as fast as the beverage market," he says. Plus, with can sheet makers continually light-weighting sheet, and containers made of other materials challenging aluminum's prominence in the beverage container market, there's less aluminum being used in the already-mature beverage market.

Nevertheless, Moison forecasts continued growth in aluminum consumption, particularly in automobile applications. And despite his assertion that UBC recovery may be reaching its peak, he still sees room for scrap aluminum to fill this expected rising demand. "Much of the additional growth in aluminum recycling will come from obsolete scrap. We believe that a substantial tonnage of this scrap—including freight trailers, lawn mowers, and cars—is currently landfilled and there is the potential, over the next few years, to capture an additional 1 billion pounds of this scrap," Moison predicts.

Turning to the red metal, "no one foresaw the continued growth exhibited in the copper market in the past several decades," says one market analyst. And, he adds, as the electrical and electronic industries have grown over the last 20 years, copper has met the resulting steadily increasing demand in wiring and other related applications, even as it has had to adjust to the volatility of free market pricing.

As for scrap's role in the equation, secondary copper's share of this growing market has been remarkably stable, according to the analyst. This ability to maintain such an unwavering share of the growing pie has been "a surprise," he says, since “there are fewer buyers of copper scrap and fewer consumers, as well as more efficient manufacturing practices that have decreased generation of prompt scrap.”

 The story with iron and steel over the last couple of decades has been decidedly more dramatic. While steel consumption has declined over the period, scrap’s share of ferrous market has markedly increased.

 A number of industry analysts point to the relative proliferation of electric-arc furnace steelmaking in recent years as the key explanation. “In 1970, only 15 percent of all worldwide liquid steelmaking was accounted for by the electric-arc furnace,” according to Julie Beatty, steel department senior researcher for Resource Strategies Inc. “By 1992, that share nearly doubled to 29 percent, and Resource Strategies projects that by 2000, nearly 40 percent of all steelmaking will be via the electric-arc furnace route.”

 Looking at their steel industry as a whole, Beatty points out that the metal has and will continue to face “considerable competition from substitute metals” across the breadth of its applications. Nevertheless, she says, steel’s competitive advantages—strength, low cost, and recyclability—combined with increased technological development for its use in construction applications should ensure its continued significant presence in the industrial world.

 Lead has seen a similar threat in its market application, though not because of competition from alternative materials. Instead, it was health and environmental regulations that forces lead out of many applications throughout the 1970s and 1980s, notes David F. Cook, marketing consultant for Lake Engineering Inc. (Dumont, N.J.).

 But consumption of lead as a whole, and particularly scrap lead, have seemingly rebounded. Cook offers a few interrelated explanations. For one thing, he points out, there has been an increase in the production of batteries—the one application that is now the lead industry. Plus a growing percentage of the lead used in that production now comes from secondary material.

 This increased use of scrap has been key to lead’s survival, Cook notes. “The battery industry responded with a campaign to recycle batteries as much as possible, and since batteries have a limited life and are easily recyclable, they’ve helped their own cause,” he says. On the other hand, he adds, many of the markets lead was phased out of—namely gasoline, solder, and plumbing—were satisfied with primary rather than recycled lead and little lead was recycled from these applications, which contributed to scrap consumption.

 Stainless steel has seen a slightly bumpier trend, though it too has experienced increasing consumption over the years, with scrap maintaining a fairly stable share of the market. But there is more there than meets the eye, according to Barry Hunter, senior vice president of Keywell Corp. (Elizabeth, N.J.), who says it’s noteworthy that stainless scrap supplies have been able to keep up with the increased consumer demand, even considering the long life cycle of stainless steel products.

 As for the future, Hunter states that “increased worldwide stainless steel production, if realized, will continue to put pressure on the scrap market, and the required scrap may not be available for all of these markets on a timely basis.” In addition, he says, as the world’s producers compete for global sales, the scrap yet to be generated as a byproduct of these sales could wind up in other parts of the world.

 Looking at zinc, it’s been the metal with the most stagnant recovery rate through the last two decades. As an explanation, one zinc industry source offers, “In a world where markets are declining, producers do not have the money to invest in new ways to recycle zinc.” Growth in zinc markets has been sluggish for a variety of reasons, he believes, including a sharp decline in the number of domestic zinc producers, foreign competition, market manipulation by speculators, material substitution, and government regulations that discourage zinc recycling in favor of landfilling.

 The commodity that has shown the most significant gains in both production and scrap market share over the last two decades, meanwhile, has been paper. Secondary fiber has been able to comprise a larger piece of the ever-increasing paper pie due to both economics and technological developments, says Wayne DiCastri, president of Pioneer Fibers Inc. (Minneapolis). “The ability to expand production capacity using scrap paper is a cheaper option than using virgin materials, and technology has allowed this to happen,” he explains. In addition, he notes, government purchasing standards, public interest in buying recycled-content paper, and a comprehensive recycling infrastructure have all fostered growth and demand for recycled paper.

 Public concern has likewise hastened the expansion of plastic recycling. And a multitude of changes in the offing could increase recovery rates even further, predicts Jimmy Hendricks, a spokesperson for the American Plastics Council (Washington,  D.C.). For instance, he points out, more and more recycled-content plastic products are coming on-line due to increased demand and technological advances that have sped up the recycling process and allowed recycled plastics to be used in new applications, most recently food-contact usage.