BY ROBERT J. GARINO
Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries (Washington, D.C.).
The U.S. aluminum industry's idealized 100-percent-recycling goal for the all-aluminum used beverage can (UBC) hit a small bump in 1991, as the U.S. UBC recycling rate fell to 62.4 percent, according to a joint survey conducted by three Washington, D.C.-based trade groups—the Institute of Scrap Recycling Industries (ISRI), the Can Manufacturers Institute, and the Aluminum Association.
While this 1.2-percentage-point drop from the record rate recorded in 1990 pushes the 100-percent goal that much further away, aluminum industry executives do not seem alarmed at the slight decline. In fact, according to virtually all industry officials contacted, the longer-term trend line remains in tact. Last year's drop, they say, can be attributed primarily to the general economic recession.
Despite the poor economy and the aluminum market weakness encountered through most of last year, more cans than ever—57 billion—were reclaimed in the United States in 1991. That's equivalent to more than 220 cans recycled for every man, woman, and child in the nation.
Figuring the Rate
The recycling rate was calculated by totaling UBC reclamation figures compiled by each association. ReMA gathers data from a survey of secondary aluminum smelters, foundries, steel mills, and other small consumers of aluminum and bimetal cans. ReMA also polls exporters of processed UBCs as well as those who remelt cans for export in the form of remelt secondary ingot (RSI). Figures from firms that melt cans for destructive, metallurgical, and chemical uses—such as steel deoxidizing, metal coating, and thermic reduction—are assembled by CMI . Meanwhile, the Aluminum Association concentrates its survey on the sheet mills.
The grand total—1.969 billion pounds of UBCs melted last year—is then multiplied by the number of all-aluminum cans in a pound to arrive at the number of cans reclaimed. As in previous years, cans continued to be manufactured lighter in 1991, with CMI reporting that it now takes nearly 29 aluminum cans to fill a pound. ( CMI figures also show that today's can is 30 percent lighter than an all-aluminum can produced 20 years ago.) Finally, the number of cans reclaimed (56.85 billion, a 3.4-percent increase over 1990) is divided by the number of new cans shipped over the 12-month period in which UBCs reclaimed in 1991 were likely shipped. The result is the annual recycling rate—62.4 percent. (See table below.)
Sheet Mills Lead the Way
Historically, aluminum sheet mills have accounted for the lion's share of UBC consumption, and 1991 was no different. In fact, more than 1.85 billion pounds of UBCs—90 percent of the year's total consumption—can be traced to sheet mills, which either melt cans directly or have scrap cans melted on their behalf. (In the latter case, so-called toll converters process the UBCs and return alloy to the sheet mills for production of can sheet.)
The largest producer, Alcoa ( Pittsburgh ), says it consumed 9 percent more cans in 1991 than in the previous year, resulting in 23 billion UBCs recycled—or approximately 40 percent of the U.S. reclamation total. Reynolds Metals Co., another significant consumer, also noted an increase. The Richmond, Va.-based firm reported its can recovery at 10.3 billions cans, a 7-percent increase over 1990.
To date, other big sheet mills have not released 1990 and 1991 can consumption figures. Nevertheless, it is assumed that, collectively, this group recorded a decline in its overall UBC usage compared with 1990.
Smelters, Exporters Record Declines
Despite relatively low posted UBC scrap values, which periodically attract secondary aluminum smelters seeking affordable scrap units, domestic secondary aluminum smelters consumed approximately 25 percent less UBCs in 1991 than they did in 1990, according to ReMA data. Why? Observers point out that soft demand for specification alloys—smelters' major product—in 1991 removed much of the incentive to buy UBCs as an alternative feed source. Total shipments from secondary aluminum plants in 1991 also were down. According to the Aluminum Recycling Association (Washington, D.C.) shipments fell from 2.288 billion pounds in 1990 to 1.914 billion pounds in 1991, about a 16-percent drop.
UBC exports in 1991—whether shipped as processed cans or RSI—were off from previous years as well. Nevertheless, according to U.S. Census Bureau figures, 1991 UBC exports seem to have held up better than last year's exports of aluminum scrap in other forms. Because Census Bureau aluminum export data are broken down into "aluminum UBC scrap" and "aluminum waste and scrap other than UBC scrap," with RSI exports lumped into the latter category, the exact quantity of UBC scrap exported in all forms is uncertain, as is the precise change from year to year. An ReMA survey indicates, however, a total 1991 UBC export decline of about 12 percent, while Census Bureau numbers show that aluminum scrap exports in all forms was down by 17 percent compared with 1990.
Values Trend Lower
Most industry officials concede that slumping values for both prime and scrap aluminum inhibited UBC consumption in 1991. UBC recycling, they point out, is price sensitive; as prices drop, so do the incentives to collect and sell to processors or smelters. In fact, several processors estimate that incoming UBC volumes in 1991 were down by more than 40 percent as a consequence of low buyback prices. Overall collection does not appear to have permanently suffered, however. Many believe that cans were simply held back from processors in the hopes that prices would recover as the year progressed.
As it turned out, posted buying prices did not recover and trended lower throughout 1991. The mill buying price for UBCs hit its high for the year—51 cents per pound—rather early in 1991 and ended the year at 32 cents per pound—only a penny per pound above the record low price of 31 cents, set back in 1985. The "street price," paid to individuals, similarly slipped, with over-the-scale quotes placed in the 18-to-25-cent-per-pound range during the final months of 1991.
As 1992 got under way, UBC prices moved higher in January and again in February. By early April, posted prices were up to 42 cents, and the street price was pegged at around 30 cents per pound.
Has UBC Recycling Peaked?
For the first time since 1986, the domestic recycling rate for UBCs eased lower, and some may be wondering whether U.S. can recycling has finally topped out. The aluminum industry would certainly say no, and could back that assertion with examples of the increasing number of new programs and incentives for collecting recyclable cans of all types.
Will the aluminum industry reach its goal of 100-percent UBC recycling? The infrastructure for collection and reuse of cans is well-established and continues to expand—without local, state, or federal pressure to introduce new deposit schemes. Thus, industry officials seem confident that, left to the marketplace, UBC recycling will regain the momentum needed to inexorably move toward the ultimate recycling objective. •