UBC Recovery Sets Record

… again! For the second year in a row, the UBC recycling rate hit a new high. On the heels of 1988’s 54.6-percent rate, UBC consumers recovered 60.8 percent of the all-aluminum used beverage can shipped in 1989.

Despite apparent weaknesses in the U.S. aluminum industry last year, more all-aluminum used beverage cans (UBC) were captured and ultimately recycled than ever before. According to data compiled through an Institute of Scrap Recycling Industries (ISRI) survey conducted in cooperation with the Aluminum Association and the Can Manufacturers Institute (CMI), 49.5 billion UBC were reclaimed in the United States in 1989, setting the recycling rate at 60.8 percent. That reclamation figure represents a 16.3-percent increase over 1988, which had held the record at 42.5 billion UBC recovered, resulting in a 54.6-percent recycling rate.

While recovery rates were up, demand for aluminum in the United States was noticeably weaker, especially when compared with end-use markets in the Far East and Europe. Part of the cause for this drop was lower domestic auto production and housing starts, which filtered through the entire aluminum industry. Consequently, domestic shipments of aluminum ingot and mill products were reported by the Aluminum Association to be off more than 6.8 percent from their 1988 levels. In addition, overall order receipts were reported down from 1988. In particular, domestic can stock orders, as also reported by the Aluminum Association, were down 6.9 percent last year from 1988.

Lower Prices Recorded

This decreased domestic demand, coupled with relatively high output by primary aluminum producers (1989 production was estimated to have increased 2 percent from the previous year) and inventory accumulation, put downward pressure on aluminum ingot prices throughout much of last year. The Metals Week monthly average started out in January at $1.09 per pound, but by midyear slipped to 89 cents per pound. At the start of the third quarter it had dropped further to 80 cents; by December the average was down to 74 cents per pound.

Not surprisingly, UBC prices, as quoted by sheet mills, followed suit, despite a few short-lived price rallies during the year. In mid-January 1989, for example, UBC consumers were paying 76 cents per pound; by the end of June, their price quotes were closer to 63 cents per pound. By year's end a 52-cent quote--a price not seen since June 1987--was commonplace. Meanwhile, the so-called street price edged to the low- to mid-30-cent-per-pound range by December.

Although aluminum companies maintain that lower UBC prices reflect the generally bearish price sentiment for all aluminum items, some reports suggest that a UBC oversupply contributed to depressing scrap can values in 1989. These reports linked the depressed prices paid for old newspapers glutting the market from curbside collection programs to prices paid for UBC, which also are being collected from curbside programs. ReMA research, however, could not substantiate UBC oversupply in 1989.

Consumption Rates Rise

Weaker prices for aluminum scrap notwithstanding, all available evidence points to greater collection and consumption of UBC in 1989. ReMA's survey estimates that 1.69 billion pounds of UBC were consumed last year, 12.2 percent more than in 1988.

The principal increase came from aluminum sheet mills, which consumed more than 1.5 billion pounds in 1989. Some of these UBC were sent directly to the mills by processors; others were converted first by other aluminum consuming companies.

Comparatively speaking, secondary aluminum smelters are not significant consumers of UBC, citing both economic and metallurgical factors as reasons they do not favor UBC as furnace feed for the alloys they produce. In addition, some of the secondary smelters that handle cans do not melt them, but simply process them for final shipment to destructive end uses such as steel deoxidizing, thermatic reductions, and chemical manufacturing. Nevertheless, these uses are included in this survey's consumption rate.

Last year, domestic secondary aluminum smelters shipped a record 2.18 billion pounds of specification ingot while consuming approximately 2.50 billion pounds of pre- and postconsumer aluminum scrap. According to Joseph S. Viland, president of both the Aluminum Recycling Association and Wabash Alloys, Wabash, Indiana, virtually no aluminum beverage cans were used to meet the raw material requirements of the highly specialized industry.

According to ReMA calculations, 1989 total domestic UBC consumption appears to have increased by 13 percent over 1988. The U.S. Bureau of Mines, which reports monthly on melted or consumed UBC, showed a 9-percent increase in consumption over 1988 based on I I months' data. It should be noted, however, that the Bureau of Mines's monthly figures tend to be substantially understated since some companies only report annually. The bureau's final adjusted numbers for 1989 will not be available until mid-1990.

On an especially positive note, Reynolds Metals Company, Richmond, Virginia, recently reported that it recycled its 100 billionth aluminum can last year, after 21 years of UBC collection and consumption. In 1989, according to Reynolds, the company processed 9.7 billion cans, a 19.6-percent market share in the United States. Throughout the U.S. UBC consumption industry, it has been conservatively estimated, hundreds of millions dollars annually are paid out to the collection and processing industries.

Export Figures Confusing

UBC export figures have proved to be very difficult to track and to reconcile with official U.S. Census Bureau information. ReMA 1989 survey data show that 76.7 million pounds of UBC were exported--either as whole or shredded cans or as remelt secondary ingot (RSI), a nonspecification ingot grade. According to ReMA numbers, exports of whole or shredded UBC increased in 1989, but less UBC-containing RSI was shipped abroad during the year than during 1988. Consequently, indications are that total UBC exports were slightly less last year than in 1988.

Looking at Census Bureau figures for comparison, reported UBC exports totaled 17,354 metric tons in 1989, compared with only 4,282 metric tons in 1988-a staggering 305-percent increase. However, ReMA's analysis suggests that there was significant underreporting or misreporting in previous years, as used cans probably were simply identified as "aluminum waste and scrap" under Schedule B export nomenclature.

Adding up all scrap aluminum export items, ReMA figures reveal that 566,000 short tons of aluminum scrap were exported last year, compared with 536,000 tons in 1988. LTBC (including RSI) accounted for 6.8 percent of that total in 1989.

How the Recycling Rate Was Figured

The UBC recycling rate detailed here was derived by multiplying the total number of pounds melted by the number of all-aluminum cans in a pound to arrive at a total can reclamation number. (Note that there were more cans to the pound in 1989 than in 1988. This represents ongoing "lightweighting" by the mills as they strive to roll thinner sheet and conserve aluminum units.) That reclamation number, in turn, was divided by the total number of new cans shipped over a 12-month period to arrive at the recycling rate. Assuming that new cans shipped return to the scrap stream in less than a few months, the new can shipment figures cover the period from October 1988 through September 1989. The new can weights were supplied by the Aluminum Association, while can shipment figures were supplied by CMI.

[SIDEBAR]

UBC Recycling

Total UBC Consumption (pounds)

1988: 1.51 billion

1989: 1.69 billion

Change: 12.2%

Cans Per Pound

1988: 28.25

1989: 29.3

Change: 3.7%

Number of Cans Reclaimed

1988: 42.5 billion

1989: 49.45 billion

Change: 16.3%

Number of New Cans Shipped

1988: 77.89 billion

1989: 81.35 billion

Change: 4.4%

UBC Recycling Rate

1988: 54.6%

1989: 60.8%

Change: +6.2 percentage points

[SIDEBAR]

UBC Consumption

UBC Melted and Consumed Domestically* (millions of pounds)

1988: 1,426

1989: 1,611

Change: 13%

Exported UBC and Remelt Secondary Ingot

1988: 78.6

1989: 76.7

Change: -2.4%

Total UBC Consumption

1988: 1,505

1989: 1,688

Change: 12.2%

… again! For the second year in a row, the UBC recycling rate hit a new high. On the heels of 1988’s 54.6-percent rate, UBC consumers recovered 60.8 percent of the all-aluminum used beverage can shipped in 1989.

Despite apparent weaknesses in the U.S. aluminum industry last year, more all-aluminum used beverage cans (UBC) were captured and ultimately recycled than ever before. According to data compiled through an Institute of Scrap Recycling Industries (ISRI) survey conducted in cooperation with the Aluminum Association and the Can Manufacturers Institute (CMI), 49.5 billion UBC were reclaimed in the United States in 1989, setting the recycling rate at 60.8 percent. That reclamation figure represents a 16.3-percent increase over 1988, which had held the record at 42.5 billion UBC recovered, resulting in a 54.6-percent recycling rate.

While recovery rates were up, demand for aluminum in the United States was noticeably weaker, especially when compared with end-use markets in the Far East and Europe. Part of the cause for this drop was lower domestic auto production and housing starts, which filtered through the entire aluminum industry. Consequently, domestic shipments of aluminum ingot and mill products were reported by the Aluminum Association to be off more than 6.8 percent from their 1988 levels. In addition, overall order receipts were reported down from 1988. In particular, domestic can stock orders, as also reported by the Aluminum Association, were down 6.9 percent last year from 1988.

Lower Prices Recorded

This decreased domestic demand, coupled with relatively high output by primary aluminum producers (1989 production was estimated to have increased 2 percent from the previous year) and inventory accumulation, put downward pressure on aluminum ingot prices throughout much of last year. The Metals Week monthly average started out in January at $1.09 per pound, but by midyear slipped to 89 cents per pound. At the start of the third quarter it had dropped further to 80 cents; by December the average was down to 74 cents per pound.

Not surprisingly, UBC prices, as quoted by sheet mills, followed suit, despite a few short-lived price rallies during the year. In mid-January 1989, for example, UBC consumers were paying 76 cents per pound; by the end of June, their price quotes were closer to 63 cents per pound. By year's end a 52-cent quote--a price not seen since June 1987--was commonplace. Meanwhile, the so-called street price edged to the low- to mid-30-cent-per-pound range by December.

Although aluminum companies maintain that lower UBC prices reflect the generally bearish price sentiment for all aluminum items, some reports suggest that a UBC oversupply contributed to depressing scrap can values in 1989. These reports linked the depressed prices paid for old newspapers glutting the market from curbside collection programs to prices paid for UBC, which also are being collected from curbside programs. ReMA research, however, could not substantiate UBC oversupply in 1989.

Consumption Rates Rise

Weaker prices for aluminum scrap notwithstanding, all available evidence points to greater collection and consumption of UBC in 1989. ReMA's survey estimates that 1.69 billion pounds of UBC were consumed last year, 12.2 percent more than in 1988.

The principal increase came from aluminum sheet mills, which consumed more than 1.5 billion pounds in 1989. Some of these UBC were sent directly to the mills by processors; others were converted first by other aluminum consuming companies.

Comparatively speaking, secondary aluminum smelters are not significant consumers of UBC, citing both economic and metallurgical factors as reasons they do not favor UBC as furnace feed for the alloys they produce. In addition, some of the secondary smelters that handle cans do not melt them, but simply process them for final shipment to destructive end uses such as steel deoxidizing, thermatic reductions, and chemical manufacturing. Nevertheless, these uses are included in this survey's consumption rate.

Last year, domestic secondary aluminum smelters shipped a record 2.18 billion pounds of specification ingot while consuming approximately 2.50 billion pounds of pre- and postconsumer aluminum scrap. According to Joseph S. Viland, president of both the Aluminum Recycling Association and Wabash Alloys, Wabash, Indiana, virtually no aluminum beverage cans were used to meet the raw material requirements of the highly specialized industry.

According to ReMA calculations, 1989 total domestic UBC consumption appears to have increased by 13 percent over 1988. The U.S. Bureau of Mines, which reports monthly on melted or consumed UBC, showed a 9-percent increase in consumption over 1988 based on I I months' data. It should be noted, however, that the Bureau of Mines's monthly figures tend to be substantially understated since some companies only report annually. The bureau's final adjusted numbers for 1989 will not be available until mid-1990.

On an especially positive note, Reynolds Metals Company, Richmond, Virginia, recently reported that it recycled its 100 billionth aluminum can last year, after 21 years of UBC collection and consumption. In 1989, according to Reynolds, the company processed 9.7 billion cans, a 19.6-percent market share in the United States. Throughout the U.S. UBC consumption industry, it has been conservatively estimated, hundreds of millions dollars annually are paid out to the collection and processing industries.

Export Figures Confusing

UBC export figures have proved to be very difficult to track and to reconcile with official U.S. Census Bureau information. ReMA 1989 survey data show that 76.7 million pounds of UBC were exported--either as whole or shredded cans or as remelt secondary ingot (RSI), a nonspecification ingot grade. According to ReMA numbers, exports of whole or shredded UBC increased in 1989, but less UBC-containing RSI was shipped abroad during the year than during 1988. Consequently, indications are that total UBC exports were slightly less last year than in 1988.

Looking at Census Bureau figures for comparison, reported UBC exports totaled 17,354 metric tons in 1989, compared with only 4,282 metric tons in 1988-a staggering 305-percent increase. However, ReMA's analysis suggests that there was significant underreporting or misreporting in previous years, as used cans probably were simply identified as "aluminum waste and scrap" under Schedule B export nomenclature.

Adding up all scrap aluminum export items, ReMA figures reveal that 566,000 short tons of aluminum scrap were exported last year, compared with 536,000 tons in 1988. LTBC (including RSI) accounted for 6.8 percent of that total in 1989.

How the Recycling Rate Was Figured

The UBC recycling rate detailed here was derived by multiplying the total number of pounds melted by the number of all-aluminum cans in a pound to arrive at a total can reclamation number. (Note that there were more cans to the pound in 1989 than in 1988. This represents ongoing "lightweighting" by the mills as they strive to roll thinner sheet and conserve aluminum units.) That reclamation number, in turn, was divided by the total number of new cans shipped over a 12-month period to arrive at the recycling rate. Assuming that new cans shipped return to the scrap stream in less than a few months, the new can shipment figures cover the period from October 1988 through September 1989. The new can weights were supplied by the Aluminum Association, while can shipment figures were supplied by CMI.

[SIDEBAR]

UBC Recycling

Total UBC Consumption (pounds)

1988: 1.51 billion

1989: 1.69 billion

Change: 12.2%

Cans Per Pound

1988: 28.25

1989: 29.3

Change: 3.7%

Number of Cans Reclaimed

1988: 42.5 billion

1989: 49.45 billion

Change: 16.3%

Number of New Cans Shipped

1988: 77.89 billion

1989: 81.35 billion

Change: 4.4%

UBC Recycling Rate

1988: 54.6%

1989: 60.8%

Change: +6.2 percentage points

[SIDEBAR]

UBC Consumption

UBC Melted and Consumed Domestically* (millions of pounds)

1988: 1,426

1989: 1,611

Change: 13%

Exported UBC and Remelt Secondary Ingot

1988: 78.6

1989: 76.7

Change: -2.4%

Total UBC Consumption

1988: 1,505

1989: 1,688

Change: 12.2%