Scrap's Autumn Slip

By Robert J. Garino and Kent Kiser

Robert J. Garino is Director of Commodities for ISRI. Kent Kiser is Editor and Associate Publisher of Scrap.

There was a chill in the air as well as a chill in the market reports offered at the fall meeting of the Bureau of International Recycling (BIR) (Brussels, Belgium), held in Dusseldorf, Germany, in November.
   With the exception of the U.S. ferrous and stainless scrap markets, which had been virtually depressed for months, the global scrap picture was healthy for much of 2000. But many markets saw their fortunes turn south in the summer and early fall, leaving scrap executives to ponder: Is this a temporary, perhaps seasonal, downturn? Or is this the beginning of a longer, more serious decline?
   The consensus seemed to be that world scrap markets have more reason than less to be optimistic about 2001. Here’s a closer look at what the experts said about their commodities in Dusseldorf.

Ferrous
United States: In the United States, steel production increased about 11 percent in 2000 compared with 1999, but U.S. steel prices declined throughout the year due to the “sheer steel supply available and the nonmarket pricing of the steel imports flooding U.S. markets,” said Robert Philip of Schnitzer Steel Industries Inc. (Portland, Ore.). Since 1990, he pointed out, imports have increased their share of the U.S. market from 18 to 29 percent.
   U.S. ferrous scrap prices moved sideways to downward throughout 2000—bad news for processors but good news for U.S. mills, who used the lower scrap prices to maintain margins and keep producing at record levels, Philip noted. Several factors could bolster prices, however, such as “the seasonal inventory needs of the mills and a dropoff in the volume of low-priced former C.I.S.-country-origin scrap entering the global markets,” he said. Also, higher energy prices could give scrap an edge over less-competitive substitutes.
   Rising freight rates, driven by the escalating cost of bunker fuel, could be another key influence on scrap demand in coming months. “The price of oil and bunker fuel means that distance to scrap supply and distance to our customers is going to be taking on heightened importance in the coming months,” Philip said.
   For 2001, the trend appears positive for steel demand, thanks especially to the promise of more orders from China for both steel and ferrous scrap, Philip said. China’s recent entry into the World Trade Organization will help position it for continued growth, opening up new opportunities for trade.
   Scrap could also see better times overall in 2001, with Philip asserting optimistically, “There are some observers who feel that we may yet see a steel scrap price rally of upwards of $20 per ton over the next six to nine months.”
Europe: Through August, steel production in the European Union was 109.1 million mt, 7 percent higher than the comparable period in 1999, noted Rolf Willeke of BDSV (Dusseldorf).
   On the scrap side, the six major European scrap-consuming countries bought 4.1 million mt, broken down as follows: Italy, 1.442 million mt; Germany, 1.259 million mt; France, 771,000 mt; Belgium, 268,000 mt; Luxembourg, 248,000 mt; and the Netherlands, 81,000 mt, Willeke reported. Annually, these countries consume about 50 million mt of ferrous scrap.
   After declining in the summer, European scrap prices rebounded, thanks in part to renewed demand from the Far East and Turkey, Willeke said. Notably, Turkey was not a big customer for scrap from Western Europe, instead sourcing its material from the Black Sea area. India also returned as a regular purchaser of deep-sea cargoes, though U.K. processors filled much of its demand, he reported.
   In another export shift, European scrap shipments to the United States began to decrease in March, then “practically went down to zero”—a sure sign that “price differences between the continents don’t exit anymore,” Willeke said.
Pacific Rim & Australia: Ferrous scrap prices in this region began to slip in the fall due to “the poor demand and low prices for finished steel products,” coupled with the weak currencies in several scrap-   exporting countries, according to a report by Kumar Radhakrishnan of Simsmetal Ltd. (North Sydney, Australia). Despite steadily increasing steel demand in Australia and the Pacific Rim, this demand 
isn’t high enough to support the region’s production capacity. Also, “the fortunes of the steel industry in the region have been affected by the slowdown in imports by the USA and Europe,” Radhakrishnan noted.
   Japanese steel production has been extremely strong, reaching 54 million mt in the April-to-September period. Its total for 2000 was expected to top 100 million mt, Radhakrishnan said. In the face of declining export orders for hot-rolled coils, however, Japanese mills were likely to cut production and could increase their exports of pig iron. Japanese ferrous scrap prices, meanwhile, were generally on the upswing until the fall.
   In Korea, a lack of construction activity and poor demand for finished steel forced mills to trim production and, hence, curtail their purchases of deep-sea scrap cargoes, Radhakrishnan reported. Several mills were also burdened by high inventories of both scrap and finished steel.
   In contrast, China’s construction activity has been “remarkable,” with its western provinces alone expected to consume 20 million mt of steel in 2000, Radhakrishnan said. The nation’s shift from blast furnaces to electric-arc furnaces is gaining momentum, increasing its demand for scrap as it grows. These factors, combined with a seasonal slowdown of ferrous scrap supplies coming from Russia, have boosted the number of deep-sea cargoes from the West into China.
   The Southeast Asian market has been generally stable, with Indonesia, Malaysia, and Singapore being consistent importers, noted Radhakrishnan. Though there’s been little activity in Thailand, steps are being taken to restructure some of its ailing mills. Healthy demand could return once the announced merger of these mills is completed. India, meanwhile, has been a regular buyer of scrap cargoes.
   In sum, ferrous scrap prices were expected to improve in the coming months, buoyed by factors such as limited availability of pig iron, pressure on DRI and HBI production due to high gas prices, and reduced supplies of scrap from Baltic and Black sea sources, Radhakrishnan said.
   Turkey: Turkey’s crude steel production totaled 9.5 million mt in the first eight months of 2000, an increase of 2 percent compared with the same 1999 period, said Mehmet Gultekingil of Euro-Scrap Alliance B.V. (Istanbul).
To meet that production, Turkey imported 4 million mt of ferrous scrap from January through June, with the leading suppliers being Europe at 1.1 million mt; Ukraine, 900,000 mt; Russia, 770,000 mt; Romania, 600,000 mt; Georgia, 250,000 mt; and Bulgaria, 150,000 mt, Gultekingil reported.
   Notably, Turkey’s scrap imports from Russia and Ukraine declined 35 percent in the January-to-June 2000 period compared with comparable 1999 figures, while its imports of European scrap increased 30 percent, Gultekingil said. For all of 2000, Turkey’s ferrous scrap imports from Europe were expected to reach 2.3 million mt, possible rising to 4 million mt in 2001, which would make Europe its number-one scrap supplier.
   Russia and the C.I.S.: Through September, ferrous scrap consumption in Russia reached about 14 million mt, about 9 percent more than the same period in 1999, noted Igor Kuzmin of MAIR (Moscow).
   Of that total, 8.6 million mt was consumed domestically, an increase of 28 percent thanks to the financial stability of Russian steelmakers and their consequent higher demand for raw materials.
   The remaining 5.5 million mt of Russian ferrous scrap was exported, 13.3 percent less than the previous year, Kuzmin said. Shipments to Turkey, China, Spain, and Italy were down 15 to 40 percent, though exports to Southeast Asian countries more than doubled to account for 20 percent of total Russian scrap shipments.
   The market picture for the fourth quarter was fuzzy, with export prices unstable and demand from Russian consumers unpredictable because many had already accumulated winter stocks, Kuzmin said.
   For 2000, total steel scrap arisings were expected to reach 18 million mt, with exports totaling 7 million mt.
In Ukraine, scrap collections reached 8.1 million mt through September—28 percent more than the same period in 1999—with 4.3 million mt being consumed domestically and 3.8 million mt being exported, Kuzmin noted. Turkey purchased half of Ukraine’s scrap exports, while Southeast Asia and Italy accounted for 18 and 13 percent, respectively.

Nonferrous
At the nonferrous division meeting, the mood was generally upbeat regarding 2000 but tinged with caution as the industry entered 2001.
   Hans-Peter Münster of VDM (Bonn, Germany) characterized 2000 as a year in which the recycling industry “took a deep breath” following the difficult 1996-to-1999 period. Overall, 2000 was more favorable to recyclers, he said.
Summarizing individual country reports, Münster noted that Europe was dominated by a weak euro in 2000 and higher metal prices as expressed on the world market. In the United States, following a positive first half, market uncertainty cast a shadow over near-term expectations, suggesting a more cautious outlook. Energy costs remain an important consideration in any forecast, Münster stated.
   Featured speaker Hans-Gerhard Hoffmann of Hüttenwerke Kayser AG (Lunen, Germany) offered an analysis of secondary copper refining in Europe.
   Of the 1.8 million mt of refined copper produced in Western Europe in 1999, secondary smelters accounted for 848,000 mt, or 47 percent. On the consumption side, secondary feed accounted for 23 percent of Western Europe’s 3.7 million mt of refined copper demand, Hoffmann reported.
   In contrast to Europe, the United States produced 2.1 million mt of refined copper in 1999, with scrap only accounting for 11 percent of the total, he said, noting that the vast majority of refined copper produced in the United States was made using ores and concentrates.
   Hüttenwerke Kayser—part of the NA Group, reportedly the largest copper recycler in the world—consumes about 260,000 mt of copper-containing raw material annually, Hoffmann said. Of that total, copper-containing scrap (including blister copper) accounts for 160,000 mt, followed by copper alloy scrap, radiators, and shredded material at 30,000 mt and low-grade materials such as ashes, drosses, and skimmings at 70,000 mt. The NA Group’s other refinery consumes about 100,000 mt a year of copper scrap.
   Looking back to the mid-1980s, Hoffmann pointed out that the NA Group continues to reduce its dependence on blister and rely more on scrap. From 1985 to 1990, its annual scrap consumption has grown from 85,000 to 170,000 mt, while its demand for blister has dropped from 30,000 to 10,000 mt. The company, he said, is investing 70 million deutsche marks in new technology to expand the range of raw materials it can consume.
   Hoffmann also discussed changes in the way copper scrap is sourced from merchants as well as what today’s refiners are doing to respond to those changes. The biggest changes include fewer long-term suppliers and a shrinking share of long-term contracts.
   Despite some direct sourcing of scrap by the refinery industry, as well as evolutionary changes in the market such as e-commerce and environmental regulations, “the scrap business will remain mainly in the hands of the merchant trade,” Hoffmann said. Refiners need merchants as their natural raw material suppliers in the future and, hence, cooperative relationships “remain essential.”

Stainless Steel & Special Alloys
United States: The U.S. stainless scrap market has been “positively depressed” and in the throes of a “dramatic correction,” said BIR President Barry Hunter of Keywell L.L.C. (Elizabeth, N.J.).
   Though U.S. production of austenitic stainless steel was “not all that bad in general” in 2000, keeping pace with 1999’s record level, it fell short of predictions, which called for at least 3 percent growth. Plus, much of the U.S. production was made in the first three quarters, and “the unbelievable strength of the U.S. dollar continued to put our U.S. producers in a poor competitive structure, as imports increase and dominate pricing,” Hunter said. 
   Another factor was that the expected strike at an Inco nickel plant failed to occur, “causing a bullish market to run for cover.” The result was that the fourth quarter found mills facing slower order books and making major inventory adjustments, Hunter noted.
   As a result, “consumer demand for our secondary products, usually required in significant volumes, has basically disappeared,” Hunter stated, adding that this market correction isn’t expected to change until “sometime well into the first quarter.” That leaves stainless scrap processors with two options: “hold or accept wholesale dealer buying levels and continue to water inventories and watch them grow,” he said.
   More upbeat, U.S. stainless scrap exports were up 48 percent in the first eight months of 2000 compared with comparable 1999 figures, Hunter reported. Asia accounted for about 88 percent of the total, with Europe claiming 10 percent. That’s a marked shift from 1999 when Asia accounted for 74 percent against Europe’s 25 percent. One notable development has been renewed interest from Japan in importing U.S. stainless scrap, with its demand accounting for 12 percent of U.S. shipments to Asia in 2000 compared with 2 percent in 1999, Hunter said.
   United Kingdom: Demand for stainless steel and related scrap increased throughout the year, with Avesta Sheffield—the major U.K. stainless producer—increasing production compared with 1999, according to Stainless Steel & Special Alloys Committee Chairman Michael Wright of ELG Haniel Metals Ltd. (Sheffield, England). Avesta, however, planned to take “production pauses” in November and December and close for two weeks between Christmas and New Year’s. It also announced a “dramatic reduction” in its raw material requirements for November and December, though it wasn’t clear if this reflected a change in demand for its finished products or simply a desire to reduce its scrap stocks for year-end accounting purposes, Wright noted. “However, it’s still unclear as to whether they will return to normal production levels in the first quarter or 2001,” he said.
   Europe: The promise of the first half of the year faded as Inco escaped a strike—which pushed nickel prices down—and stainless activity in Asia and the United States trended downward. Another notable factor was the decision by the major stainless producer in Spain to drastically reduce its scrap stocks through the remainder of 2000, which meant that considerably less material could move from Germany and the Netherlands to Spain, according to a report by Walter Riedweg of Leila A.G. (Zurich). Other European consumers weren’t able to absorb the additional available tonnage, causing scrap inventories at both mills and processors to become relatively high.
   Italy’s stainless industry, in contrast, was positive on virtually all fronts in 2000, featuring rising production, steady scrap demand from domestic mills, reliable scrap supplies, adequate prices, and favorable domestic economic growth, said Sandro Giuliani of Giuliani Metalli SAS (Milan). The only negative factor was an effort by mills to reduce the price of the nickel content in scrap, an attempt “encouraged on a European level, supported by the offers coming from the USA market at a price which is lower than domestic prices,” he noted.
   In 2001, new investment by Italian mills is expected to boost production and, hence, their scrap demand. “This leap will further modify the situation of supplies in favor of scrap dealers and perhaps modify the whole European scrap market,” Giuliani said. This new production and the reduction in cheap scrap offers from U.S. suppliers “will put an end to the steelworks’ attempt to reduce the nickel-point pricing,” he stated.
   The prospects for Europe as a whole in 2001 are generally positive, Riedweg added. With no production cuts in Europe announced as of last fall, “an increased demand and request for stainless steel scrap can be anticipated,” he said.
   Japan: Recovery of domestic stainless steel demand in Japan gave a shot in the arm to the country’s stainless mills, which were expected to produce more than 3 million mt in 2000—the highest level since 1997, according to a report by Yokota Osamu of Sumitomo Corp.
   On the scrap side, Japanese mills imported 140,034 mt from January through August, with Taiwan being the largest supplier at 37,624 mt, followed by the United States at 31,989 mt, China at 17,873 mt, and Hong Kong at 17,566 mt, Osamu said.
In the same period, Japan exported about 48,373 mt of stainless scrap, mostly to South Korea.

Paper
United States: Despite decent demand through the first three quarters of 2000, the U.S. scrap paper market anticipated a weak fourth quarter, with that weakness possibly extending into the first quarter of 2001, according to a report by Steve Vento of Recycled Fibers International (Sunrise, Fla.).
   This trend was certainly evident in the U.S. scrap paper export market. Through August, U.S. exports of recovered paper totaled 6,737,241 tons, up a whopping 26.3 percent compared with the same period of 1999. Shipments increased to Italy, Spain, Canada, Mexico, China, Indonesia, and Thailand, Vento noted.
   That’s the good news. The bad news is that U.S. scrap shipments decreased to Taiwan, South Korea, the Philippines, and Japan. And, beginning in September, U.S. scrap paper shippers were facing lower demand from all major importing countries—in both the Far East and Europe—through year’s end, Vento said.
   The same tale applied in the domestic U.S. market. Though low grades such as OCC and mixed paper enjoyed stable demand into the fall, prices for both were expected to weaken in the fourth quarter, Vento reported. Part of the reason was that domestic linerboard and medium mills planned to take additional downtime in November and December.
   Similarly, slipping market prices suggested impending weakness for deinking news. For their part, pulp subs saw drastic price reductions in the fall, with overseas buyers reporting that they were being offered prime pulp at discounted prices, Vento stated.
   The only strength was found in woodfree deinking grades such as sorted white ledger, coated book stock, and sorted office paper, which were in demand both domestically and internationally, Vento said. One explanation was that some mills in the Far East reportedly were purchasing extra tonnages because they had low inventories of recovered paper.
   United Kingdom: The U.K. scrap paper market was balanced at the start of the fourth quarter and was expected to remain so through the end of the year, said Paper Division President Gerry West of Severnside Waste Paper Ltd. (Cardiff, Wales).
   Most high-volume mills were running at full capacity, and all producers could buy enough recovered paper to meet their needs, with some even beginning to rebuild their scrap inventories, West explained.
   One major mill group reduced its buying prices for OCC and mixed paper beginning in November, while tissue manufacturers trimmed their purchase prices for colored woodfree deinking grades that same month, West noted. Though there was a slight upturn in demand from Asian mills in the fall, attempts by freight companies to raise shipping costs worked against this trend.
  Germany: Despite a positive first half of the year and continued demand in Europe, the German market was hurt in the second half by declining orders from Asian consumers, which led to an excess of supply, said Günter Griesse of Trapp Rohstoffe & Recycling GmbH & Co. KG (Frankfurt, Germany). This situation was exacerbated by the higher seasonal collections of scrap paper in September. The export of recovered paper to Asia continued but only at “very drastically reduced” prices, he noted. With December and January expected to be weak, any recovery in the market will only be seen in the spring of 2001, Griesse said.
   In the longer term, the German scrap paper market could be bolstered by the anticipated 3-percent growth of the German economy in 2001 and higher demand from Asian mills, though the market’s ultimate health will be affected by the strength of the euro and oil prices, he concluded.
   Italy: The Italian market showed considerable strength through July, with production up 7.5 percent and consumption of scrap paper up 11.7 percent to 2,835,428 mt compared with the same period of 1999, according to a report by Gianpiero Magnaghi of Macpresse S.R.L. (Milan). In the same period, Italy imported 352,000 mt of scrap paper—up 2.3 percent—and exported 130,000 mt, an increase of 150 percent.
   Beginning in August, however, demand and prices in Italy began to ease, Magnaghi noted. Still, “because the available stocks of recovered paper are surely not too big, we can expect in a reasonable time a better-balanced situation of the market,” he said.
   The Netherlands: The Dutch market “significantly worsened” beginning last summer, mainly due to a dramatic fall in scrap paper exports from the Netherlands to Southeast Asia “because of the downturn in prices in the U.S.,” said Maarten Kleiweg de Zwaan of BPB Recycling Nederland (The Hague).
   Since July, prices for OCC and mixed paper declined 30 percent, while export tags for those grades were 20 percent below Dutch mill November prices. As Kleiweg explained, “Dutch mills were and remain reluctant to decrease their prices in line with the export prices due to the damaging effect on their selling prices of paper and board.”
   On a brighter note, demand for deinking news remained relatively strong thanks to extra capacity coming online in Europe, and pulp subs also showed strength, with their prices being supported by the high U.S. dollar compared with the weak euro, Kleiweg said. In the new year, demand is expected to pick up, with prices forecast to stabilize at current levels.
   Spain: The first half of 2000 was solid in the Spanish scrap paper market, with collections rising 14 percent to 1.7 million mt, imports totaling 300,000 mt—with projections calling for 700,000 mt for the year—and consumption reaching 2 million mt, up about 6 percent, said Manuel Fernandez Alvarez of REPACAR (Madrid).
   The market began to decline in the second half, however. Though new capacity was expected to boost OCC demand in Spain by 200,000 mt a year, mills prepared for this in advance, thus minimizing any jump in purchases and prices, Alvarez noted. The deinking and high-grade niches, meanwhile, were defined by a balance between offers and demand, with a trend toward decreasing prices as the year ended.
   Turkey: Beginning in the second quarter, scrap paper demand in Turkey was hit by a recession defined by insufficient mill orders and growing stocks of both finished paper products and recovered fiber, according to a report by Ekrem Demircioglu of Donkasan A.S. (Istanbul).
   In the third quarter, import prices of ordinary grades—especially from the United States—were lower than domestic prices, prompting Turkish mills to lower their buying prices.
   Market conditions remained stagnant into the fall and inventories continued to grow, halting all imports of scrap paper and slowing domestic purchases, Demircioglu said. Hopes for improvement were pinned on a seasonal boost in paper demand and potentially higher demand to feed 250,000 mt a year of new capacity in the Turkish market. 

A Worldly Steel Perspective
Examining the European and global steel markets, Dieter Ameling, president of the German Steel Federation and chairman of the German Iron and Steel Institute (Dusseldorf), noted that world crude steel production reached 788 million mt in 1999, with the European Union leading the way with 155 million mt, followed by North America at 129 million mt, Eastern Europe/C.I.S. at 127 million mt, China at 125 million mt, and Japan at 95 million mt.
   For 2000, global crude steel production was expected to total 850 million mt against projected apparent finished steel consumption of 752 million mt. This consumption is forecast to expand to 836 million mt by 2005, Ameling noted.
In Europe, Germany is the largest steel producer at about 42 million mt in 1999, with the remaining top-five being Italy at 25 million mt, France at 20 million mt, Belgium at 11 million mt, and the Netherlands at 6 million mt, reported Ameling. Of note, five of the top-10 steel producers in the world are European.
   About 62 percent of European steel is produced in oxygen furnaces, while the remaining 38 percent comes from electric-arc furnaces (EAFs), whose market share is growing in Europe, he said. Problems with the availability of scrap and DRI, however, are limiting the further increase of EAF steelmaking.
   As for raw materials, 359 million mt of ferrous scrap was consumed worldwide in 1999 compared with 39 million mt of DRI and 541 million mt of hot metal, Ameling said. European steelmakers consumed 86 million mt of scrap in 1999.
   Trends to watch in steel include the continued globalization of the industry, with China, Eastern Europe, the C.I.S., and developing countries steadily claiming a larger share of global steel trade, noted Ameling. Consolidation in the steel industry and the businesses of its suppliers and customers is also transforming the business.
   And, of course, e-commerce is expected to play a major role in steel’s future. Some predictions, in fact, say that 400 million mt a year of finished steel products and 300 million mt of ferrous scrap could be sold over the Internet by 2010, Ameling said.

A Stainless Turning Point
Though the stainless steel market was “booming” in the first half of 2000, it has reached a “turning point,” said Heinz Pariser of Heinz H. Pariser Alloy Metals & Steel Market Research (Xanten, Germany).
   Global stainless steel production in 2000 was expected to reach 18.98 million mt—up 10 percent from 1999—with Europe producing 8.06 million mt; Japan, 3.76 million mt; and the United States, 2.37 million mt, or 8.3 percent more than 1999, Pariser said.
   For 2001, Pariser offered two scenarios—a “base case” in which world stainless production would total about 20 million mt and a “horror,” or worst-case, scenario in which production would decline to 17.9 million mt. Factors that could affect the market next year include ongoing destocking and higher energy prices, he noted.
   Assuming 20 million mt of stainless steel production in 2001, Pariser estimated that 650,000 mt of primary nickel would be required along with 5.5 million mt of purchased scrap. Despite this potential 6-percent rise in scrap demand, scrap prices are expected to average $750 a ton compared with $860 in 2000. Expressed in nickel units, Pariser’s forecast calls for LME cash nickel to average $2.95 a pound in 2001 compared with $3.91 in 2000. Primary nickel, he said, would remain in a statistical surplus in 2000 and 2001.
   Though he noted that the stainless steel industry isn’t in a “bad mood” at the moment, new capacity additions could result in “severe overcapacity” beginning in 2002 and 2003.

Europe's Ambitious Paaper Recycling Goals
In the future, “the trend is very much upward in recovered paper consumption,” said Georg Holzhey of Haindl Papier GmbH (Augsburg, Germany). To meet this demand and succeed in the future, however, the European scrap paper industry—in cooperation with paper mills—must meet several goals:
   • Scrap paper recovery must increase throughout Europe. Many European countries already have high collection rates, including Germany (73 percent), Austria (66 percent), Finland (65 percent), and the Netherlands (57 percent), so it will be harder for them to boost their recovery rates than countries with lower rates such as Italy (35 percent), Great Britain (40 percent), France (44 percent), and Spain (46 percent), Holzhey noted.
   Eastern European countries, which currently have low recovery rates, will play a role in this effort as their environmental awareness grows.
The challenge will be to collect more paper at “acceptable and competitive costs,” he said.
(As an aside, Holzhey noted that the European Recovered Paper Association and the Confederation of European Paper Industries have pledged that by 2005 at least 56 percent of the paper and paperboard used in Europe will be recycled and that further measures will be taken to improve the environmental performance of the industry.)
   • Paper producers must design their products to be recyclable and work to eliminate contaminants in their products that impede recycling.
   • Collection systems and sorting techniques must be improved.
   • Collected material must meet the necessary quality standards and specifications.
   • The price volatility of the recovered paper market must be minimized. The erratic price swings of the past “will no longer be tolerated by our buyers,” Holzhey stated. “They are already considering substitutes.” To resolve this problem, processors and mills could forge mutually beneficial supply contracts, specifying fixed prices over defined time periods or price ceilings and floors, with quarterly adjustments to reflect actual market changes.
   This could only work, however, if it’s done throughout Europe—not on a country-by-country basis—and if such arrangements covered the three major categories of mixed paper, supermarket grades, and deinking material.
   • On the political level, European countries must once and for all acknowledge that scrap paper is not a waste material and not subject it to unreasonable regulations and potential ecological taxes.

PVC’s Recycling Challenges
In an overview of the polyvinyl chloride (PVC) market—and the obstacles impeding PVC recycling—Beate Kummer of BVSE (Bonn, Germany) noted that world PVC production has risen from 3 million mt in 1965 to 20 million mt in 2000. PVC’s principal applications are building products (57 percent), household goods (18 percent), packaging (9 percent), and electronic devices and automotive components (7 percent each).
   In the European Union (EU), about 4 million mt of PVC was slated for disposal in 2000, which will increase to 5.3 million mt in 2010 and 7.8 million mt in 2020, Kummer said. Little PVC is recycled because the PVC recycling infrastructure isn’t equally or sufficiently developed in all EU countries; there’s low acceptance of products made from recycled PVC; the cost of recycled PVC products can be too high compared with the cost of those made from virgin PVC; and directives discouraging the landfilling of PVC currently aren’t followed or implemented, she noted.
   Technical hurdles to PVC recycling include concerns about the release of plasticizers and/or heavy metals during processing, as well as the difficulty and costs of separating PVC from PET, Kummer said.
   Incineration of PVC for its energy value presents problems, too, due to its chlorine content and the potential release of dioxin, which substantially increases the cost of cleaning flue gas.
   Landfilling PVC also raises concerns in that its plasticizers can partially break down and leach, and its emissions can possibly last longer than a landfill’s technical barriers, she pointed out.
   To promote PVC recycling, the EU could impose collection and recycling quotas for relevant PVC materials or, instead, seek a voluntary commitment from industry to develop the market; EU members could establish receiving systems for PVC materials; standards could be developed to promote the use of recycled PVC; manufacturers could label PVC products clearly to enhance separation and recovery; and companies could be encouraged to develop new recycling process for postconsumer PVC materials, Kummer said.•