Uncertain commodities markets led to presentations with as many questions as answers at the 2016 Bureau of International Recycling Convention in Berlin By Brian Taylor
Recyclers and traders who gathered for the 2016 Bureau of International Recycling (BIR) World Recycling Convention in Berlin in late May and early June discussed a scrap market that had been volatile and hard to predict in the preceding months.
Peaks and troughs in metals pricing in particular were the focus of several of the convention’s division and committee meetings, while international trade and safety issues also received attention.
The several hundred recyclers who assembled for the event heard reports on a sector that still has optimistic long-term prospects but that may continue to struggle in the near term.
A Questionable Spike
Ferrous scrap processors may have appreciated increased scrap flows and pricing in April and May 2016, but president of the Bureau of International Recycling (BIR) Ferrous Division has asked whether the price spike was boosted by investors in Shanghai. Schmiedel raised the question at the BIR’s 2016 World Recycling Convention in Berlin in late May.
William Schmiedel of Sims Metal Management noted that on April 21, 2016, on the Shanghai Futures Exchange (SHFE), contracts for 220 million tons of steel rebar were traded on one day—more than the entire annual production of rebar in China.
As has long been in the case on the nonferrous side of the scrap recycling business, Schmiedel commented that speculation may now be “something we will have to contend with” in the ferrous scrap sector. Calling the spring price spike, which followed a multi-month slump, a rollercoaster is “an understatement” said Schmiedel.
The steel and scrap price slump, largely caused by exported low-priced Chinese billet shipped to scrap importers such as Turkey, eventually drove scrap prices into a range that caused supply shortages, he added. The resulting ferrous scrap price increase in March, said Schmiedel, was an indication that when prices are below $200, “The basic [scrap] collection system of our industry breaks down.”
Ferrous Division board member Tom Bird of Mettalis Recycling Ltd. in the United Kingdom, pointed to temporary steel output cuts in Tianjin, China, as another reason for the spring price spike. Civic officials in that city asked steelmakers throughout Tianjin to idle their furnaces in the weeks leading up to a local flower festival held in April and May.
The resulting “reduction in billet for a while” helped mills in places like Turkey “turn back to scrap,” said Bird. Those mills are back online, however, and “market dynamics have changed again,” remarked Bird. Economist Jason Schenker of Prestige Economics, based in Texas in the United States, provided a global economic forecast that was not greatly encouraging for the scrap or steel industries.
Schenker said the economic indicators he looks at have convinced him that both China and the U.S. are in manufacturing recessions. In China’s case, the company’s lengthening string of weak monthly purchasing managers index figures points to “a worsening recession,” said Schenker.
In the U.S., Schenker said the automotive sector is the only major manufacturing sector that currently has strong output. The construction sector, meanwhile, exhibits marginal activity and the energy sector is in a severe situation that includes considerable numbers of loans likely to go unpaid. To the delegates assembled in Berlin, Schenker noted that some of the EU’s economic indicators have been strong in nine out of the last 10 months. But considering the energy sector woes in particular, Schenker added, “If you think everything is great in the U.S., I have bad news—it’s not.”
Unintentionally Unsafe
Shredder Committee presenters at the BIR Convention gave an overview of new technologies, provided an update on the status of a European effort to establish best practices and gave a warning of the hazards of air bags in the feedstock stream.
George Adams Jr. of U.S.-based SA Recycling said his firm suffered an injury-causing explosion of an air bag on a picking line in early 2013. Adams said pickers at an Arizona shredding plant “saw sizzling and sparks on the belt, and before they could do anything, it [an automobile air bag] exploded.”
Adams said the widespread use of air bags, while it has been good for driver and passenger safety, has presented “a dangerous situation,” and that some newer car models “have as many as 30 air bags in them.” He added, “It is becoming a bigger issue because cars have more and more air bags.” The California-based recycler showed a photo of two cylinder-shaped air bag units commonly used in German makes and models. “They look kind of like a pipe bomb,” said Adams, noting that employee witness statements used that same comparison.
“All of us have to be careful”, Adams said of shredder operators in the United States, where he said there is no national requirement for dismantlers or car owners to remove air bags before end-of-life vehicles are taken to shredding plants. While an air bag explosion in the shredding chamber can be loud and disruptive, the danger is particularly acute on picking lines if air bags make it through the shredding chamber without deploying. Adams showed a photograph of how his pickers must now be outfitted, with a face shield and bulky puncture-resistant vest, after in the Arizona incident a worker suffered two broken ribs and a punctured lung from shrapnel sent flying by the exploding airbag.
Shredder Committee Chair Manuel Burnand of FEDEREC (a French recycling federation) provided an update on the shredder plant portion of the BREF document, designed to create best practices to help shredder operators meet dust and water emissions control requirements in the European Union. He said FEDEREC had helped collect information from a larger number of shredder operators in Europe, helping to provide a more realistic portrayal of current operations and benchmarks.
Scott Newell III of United States-based Newell Recycling Equipment said auto shredders and downstream systems have continued to automate and to provide more thorough separation of materials. He said shredder monitoring systems have helped plant operators know exactly what they are doing right and also where problems need to be addressed.
In terms of downstream sorting, Newell said the Metal Loss Monitor from United States-based Eriez accurately assesses the amount of metal in auto shredder residue (ASR) that is about to be disposed of. “This allows the operator to be alerted that there is some type of [improper] condition,” said Newell. “The savings for quick fixes is significant,” he added. “If an adjustment can be made that rectifies a problem within minutes rather than hours or even days, the benefits are great.”
Breaking More Barriers
The proposed Transatlantic Trade and Investment Partnership (T-TIP) is facing criticism and delays, but the pact “could yield substantial economic benefit” to the nations involved, according to a guest speaker at the BIR’s International Trade Council meeting.
Christian Bluth, a project manager with the Germany-based Bertelsmann Stiftung (Foundation), says the research of his foundation and others leads him to forecast that passage of T-TIP would be especially beneficial to Spain, the United Kingdom, Ireland and to Scandinavian nations. The basic materials and recycling sectors would likewise benefit, said Bluth, citing T-TIP benefits that would reduce tariffs and regulatory compliance costs in both basic materials and equipment exporting and importing.While T-TIP has the backing of top-level officials in both the United States and the European Union, it has been met with rising skepticism by some voter and elected officials on both sides of the Atlantic. “Germans are concerned about potential effects of regulatory change—that standards will be lowered,” said Bluth. In the U.S., meanwhile, “they fear a loss of jobs,” he added.
Bluth said President Obama has promised “to put his political will behind it, but is that enough?” On the other side of the Atlantic, T-TIP must be ratified not only by the EU but also each of its member nations.
At the International Trade Council meeting, Bluth was preceded at the podium by Dale Didion of AKUA, a U.S.-based company that produces devices to detect and report cargo container tampering. Didion said some devices made by AKUA can be mounted on the outside of cargo containers to detect lock tampering while others can be mounted inside to detect changes in light level or temperature. The devices “send out alerts immediately” to their owners, said Didion. The AKUA devices also provide real-time tracking information as to where the container is. Didion offered BIR attendees a case study of a potato seed company that found that some of its containers “went to unexpected ports” and spent idle time off the coast of Portugal. The 2016 BIR World Recycling Convention was May 29-June 1 at the InterContinental Hotel in Berlin