Results of ISRI's 1988 UBC Survey: Record Setting Aluminum Cans

May/June 1989

The UBC recycling rate topped 54 percent in 1988--a record--with more than 42.5 billion all-aluminum used beverage cans reclaimed. Aluminum can sheet producers and can manufacturers are eyeing even higher recovery rates for the near future. Is a 75-percent recycling rate possible? And what's the status of steel cans?

By Robert J. Garino

Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries, Washington, D.C.

The Institute of Scrap Recycling lndustries' (ISRI) annual survey on recycling all-aluminum used beverage cans (UBC) revealed several significant all-time records set in 1988. Launched in 1981, ReMA's first survey uncovered about 23.4 billion cans reclaimed, for a recycling rate of 49.2 percent. However, the 1988 survey, done in cooperation with the Aluminum Association and the Can Manufacturers Institute, had greatly expanded coverage, capturing and recording more recycled cans than ever before.

Nevertheless, not all cans are being counted, with millions "lost" every year in municipal solid waste streams. In addition, some recycled cans are not being counted, including those consumed by industry for various metallurgical applications and those remelted as scrap and exported. Still, the numbers of counted cans are impressive--in terms of absolute size, growth rates, and the amount of aluminum being diverted from the nation's overcrowded landfills.

Just how big is the all-aluminum beverage container market? Speaking at ReMA's 1989 convention in Los Angeles, David Smith, general manager, Continental Resource Recovery, Chicago, and Linda Peotter, manager, business development, Golden Aluminum Company, Lakewood, Colorado, reviewed the growth in market share held by the all-aluminum can compared with that of bimetallic cans (steel bodies with aluminum lids). Smith credited aluminum's "superior recyclability and other inherent values" as reasons for aluminum's share of the beverage can business-aluminum's portion rose to an all-time high of 96 percent, with aluminum capturing 99.9 percent of the beer market and 92.9 percent of the soft-drink market last year.

Smith put this into perspective, translating a 96-percent market share into 78 billion all-aluminum cans produced in 1988 out of 81 billion beverage cans of all types. Smith said that further translates to about 215 million all-aluminum cans purchased by Americans every day of the year; he believes each American currently purchases almost one all-aluminum can each day.

Smith's market forecast pointed to an even larger can market in the near future. In fact, according to Smith, the number of all-aluminum cans produced annually is projected to grow as high as 120 billion by 1995--more than 50 percent greater than in 1988. With such a dynamic and growing beverage can market, UBC likely will continue to grow in concert. Peotter remarked that the aluminum industry is looking to increase the recycling rate from 54.6 percent today to 75 percent or more by 1995.

Steel Cans Moving Up

Steel cans have a viable place in the beverage can market. In fact, competition for the market recently has intensified, according to a research study released this year by Walden Research Inc., Concord, Massachusetts. The study pointed out, for example, that the steel industry will have ample capacity for growth in the soda can market, while producers of aluminum can 3tock will face capacity constraints that will, it is believed, "aggravate pricing pressure on their own products." The study forecasts a slight loss in market share for aluminum cans in 1989.

Along with an apparent cost advantage for steel (based on total raw material and manufacturing costs) steel cans also are highly recyclable. Lukens Steel Co., Coatesville, Pennsylvania, recently announced that it is recycling steel cans at a rate of more than 1,000 net tons of steel scrap per month. Two municipal waste recycling companies are providing the used cans.

As noted earlier, the beverage can market is in excess of 80 billion cans-however, total shipments of all types of cans for food and beverage is actually closer to 113.4 billion cans, according to the Can Manufacturers Institute. Steel is considered to be as dominant in food cans as aluminum is in beverage cans and, similar to steel's inroads into beverage cans, aluminum is adding market share in the food can business.

Alcoa No. 1 in Can Recycling

To determine who is reclaiming aluminum beverage cans, ReMA's survey annually canvases aluminum sheet mills, secondary aluminum producers and other consumers, and exporters of UBC. Not surprisingly, the most important consumers of UBC are the aluminum companies, which produce the sheet from which new cans are created.

Although individual responses from the sheet rollers are not directly available to ISRI, Alcoa, Pittsburgh, Pennsylvania, is generally recognized as the largest single consumer of UBC. In 1987, based on calculations resulting from this survey, ReMA estimated Alcoa's market share at around 33 percent of the 35.6 billion cans reclaimed. Reynolds Aluminum, Richmond, Virginia, was thought to be next largest at 22 percent, followed closely by Alcan Aluminum Corp., Cleveland, Ohio, and Kaiser Aluminum & Chemical Corp., Pleasanton, California, each with around 15 percent of the market.

Last year, Alcoa added to its market share. As reported in the press, Alcoa increased its purchases in 1988 by 35 percent, taking in some 16.1 billion cans out of 42.5 billion-that works out to be nearly 38 percent of the market. Reynolds reported that it processed 9.3 billion cans in 1988, maintaining its 22-percent market share.

Secondary Smelters Use Less

A close look at secondary aluminum smelters in the U.S. suggests that this particular group consumed less can scrap in 1988 than in 1987. Secondaries continue to melt cans for sheet rollers on a conversion basis, but as a feed source for alloy, UBC is not favored. Some secondaries attribute most of this decline to the relatively high values placed on this form of old scrap through much of 1988. Some other secondaries also note purely metallurgical reasons for not melting aluminum can scrap into casting alloys.

Tracing Can Prices

Aluminum UBC prices started out 1988 in the mid-60-cents-per-pound range and moved higher-though not nearly as fast as published quotations for primary aluminum ingot. For example, for the first quarter of 1988, UBC prices quoted by the major consumers were around 70 percent of the Metals Week average. Ingot prices soared higher through midyear but UBC quotes held at 73 cents, settling in at a low of 60 percent of the Metals Week average for June.

Nevertheless, secondaries were not believed to be active consumers of UBC, although reports surfaced that some new buying occurred in the fourth quarter of 1988.

Apparently, a few smelters took notice of widening spreads in the areas of finished alloy, UBC, and other forms of aluminum-containing scrap.

In 1988, a record was set for scrap aluminum exports far surpassing the 1980 record. Figures released by the U.S. Department of Commerce showed a 44-percent increase in UBC exports-from 2,975 short tons exported in 1987 to 4,282 short tons shipped overseas last year. In addition, remelt scrap ingot rose dramatically, from 59,088 tons recorded in 1987 to 97,389 tons last year-an increase of nearly 65 percent.

ReMA's survey also pointed to an increase in UBC exports, although not quite of the magnitude recorded by the Commerce Department. ReMA data, which includes UBC plus UBC as a remelt item, recorded an increase of approximately 30 percent-from 30,254 tons to 39,300 tons. It is quite possible that more UBC is being melted and exported than appears in ReMA's survey.

Table 1--U.S. Aluminum UBC Recycling

	1988	1987	1986	1985
		(in billions)
UBC melted and consumed (pounds)	1.505	1.335	1.192	1.232
Cans per pound	28.3	27.4	27.0	26.6
Number of cans reclaimed	42.516	36.570	32.189	32.771
Number of cans shipped	77.886	72.458	68.343	64.908
Recycling rate	54.6%	50.5%	47.1%	50.5%

Table 2--1988 Exports (short tons)

	1988	1987	% Change
Aluminum waste and scrap	434,731	338,940	+ 28.3%
UBC	4,282	2,795	+ 43.9%
Remelt scrap ingot	97,389	59,088	+ 64.8%
Total	536,402	401,003	+ 33.8%

Source: U.S. Department of Commerce.

The UBC recycling rate topped 54 percent in 1988--a record--with more than 42.5 billion all-aluminum used beverage cans reclaimed. Aluminum can sheet producers and can manufacturers are eyeing even higher recovery rates for the near future. Is a 75-percent recycling rate possible? And what’s the status of steel cans?