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Kansas Scrap Metal Database Nearer

Kansas scrap yards would have to report purchases to a new state database as soon as in 2020, per recently approved legislation.

Approved by state senators on March 27, Senate Bill No. 219 requires the Kansas Bureau of Investigation to create a database by Jan. 1, 2020. The legislation has been forward to the House of Representatives for consideration.

If the current legislation is enacted, Kansas scrap metal dealers would have to report to the state database information about materials purchased from individuals, including customer identification details and transaction data. SB 219 shifts the responsibility for creating and administering the database from the state’s attorney general to the KBI.

Though previously enacted legislation had required his office to run the database, Attorney General Derek Schmidt told the Senate Judiciary Committee that there haven’t been sufficient funds to do so, according to a Pratt Tribune article on shifting the Kansas scrap-metal database to the KBI.

Senators had proposed taxing scrap metal purchases to help fund the database. But they removed the taxing provisions before approving SB 219.

SB 219 also reduced the maximum annual state licensing fee for scrap metal dealers to $500 from $1,500. Provisions that would have required criminal background checks and fingerprinting of scrap metal dealers were removed as well, The Topeka Capital-Journal reported in an article on the Kansas scrap-metal dealer database.

SB 219 could be modified further in the House of Representatives. The Kansas legislature is scheduled to adjourn in early May.


Progress in U.S.-China Trade War May Help Copper Prices

President Donald Trump’s decision to delay an increase in tariffs on Chinese exports could indicate that the end of a trade dispute that has disrupted the scrap industry may be nearing.

A deal could help copper prices, which have struggled as the U.S. and China have exchanged tariffs in a year-long trade war.

The U.S. had planned to raise tariffs on $200 billion of Chinese goods from 10 percent to 25 percent on March 2. But the Office of the U.S. Trade Representative announced on Feb. 27 that the increase would be suspended indefinitely, thereby confirming a delay that Trump had first indicated was possible on Feb. 24, citing progress in trade talks.

According to Reuters, on Feb. 25, the three-month price of copper reached $6,516.50 per ton, its highest since July 4, 2018, Recycling Today reported in an article on how the copper price strengthened on positive China-U.S. talks.

U.S. exports of copper to other countries, like India, Japan, Malaysia and South Korea, have increased as China has tightened restrictions on imports, Institute of Scrap Recycling Industries economist Joe Pickard wrote in a recent summary of commodity news.

Total U.S. scrap exports to China decreased 37 percent, or by $1.9 billion, to $3.3 billion for the first 11 months of 2018, according to Pickard. U.S. scrap exports to countries other than China increased 13 percent, or by $2.5 billion, to $18.7 billion during that same period.

On Feb. 27, U.S. Trade Representative Robert Lighthizer told members of Congress that any deal that the administration reaches with China would not need congressional approval, unlike traditional free trade agreements, according to a CNN article on the U.S.-China trade war tariffs. “Instead, the scope of the agreement will focus on unfair trading practices specified in the Trump administration's Section 301 investigation, which provided the basis for imposing tariffs last year.”


Lithium Batteries Pose Fire Risks for Scrapyards and E-waste Recyclers

Lithium batteries are dangerous for recycling centers.

Used to power popular accessories such as smartphones and cameras, the batteries are often discarded along with their devices but cannot be recycled in the same manner because they can be combustible.

A 3,000-pound ferrous stockpile caught fire at a Tacoma scrapyard when a lithium-ion battery was included with a large load of consumer scrap. “People are unaware of these batteries and are getting them into the shredding stream,” Simon Metals President Paul Olsen said, according to a Recycling Today article.

Small but powerful lithium-ion batteries can retain much of their charge after the device that contains them is thrown into the trash or in with recycling. The batteries can then ignite if their terminal touches metal, thereby closing the circuit and creating a spark.

“If it’s at a recycling facility where it’s mixed in with paper and other items that are burnable, that goes up like you wouldn’t believe,” Carl Smith, CEO and president of the nationwide Call2Recycle program told USA Today for a story about how exploding lithium-ion batteries are causing trash fires. Lithium-ion batteries caused fires at an Indianapolis recycling plant and a recycling facility in New York City, for example, the newspaper reported.

Managing lithium-ion batteries

Call2Recycle has launched a battery safety campaign to prevent safety incidents such as fires. The organization estimates that 175 million pounds of lithium-ion batteries alone were sold into the U.S. market in 2017, USA Today noted.

Call2Recycle encourages consumers to recycle batteries by dropping them off at approved recycling locations. It also recommends taping battery terminals so that they do not cause a fire by rubbing against surfaces that could ignite sparks.

Employees at IT asset disposition company HOBI International manually remove all batteries, tape over their terminals and put them aside for shipment to battery recyclers, according to a Scrap magazine article about end-of-life hazards and product design. Scrap suggested that battery designers help mitigate fires by incorporating risk-reducing features like internal insulators and external terminal covers.

Olsen said that Simon Metals would take new precautions to prevent fires like the one it had at its Tacoma scrapyard, such as by forming smaller piles of materials and being more discerning in the materials it takes.

“We’re going to more closely watch what suppliers bring in,” Olsen said, according to Recycling Today. “We have radiation detectors, but [lithium-ion batteries] can be hard to find. So, suppliers have to isolate them. They have to get the batteries taken care of and out of the supply stream.”


Aluminum Prices and Scrap Affected by Market Uncertainties

Tariffs. Trade wars. Consumption shifts.

All raise questions about the long-term direction of aluminum prices.

At $2,011 per ton, the London Metal Exchange price for aluminum was 10.8 percent less at the end of September than it was at the start of January. It had been as low as $1,966 per ton on June 4 and as high as $2,597.50 per ton on April 19.

Uncertainty has mounted as tariffs have been imposed, trade wars have arisen and manufacturers have shifted from primary aluminum to scrap.

North American Tariffs

Most recently, negotiators did not remove the Section 232 tariffs that the U.S. has levied on aluminum from Canada and Mexico when agreeing to terms for the United

States-Mexico-Canada Agreement (USMCA) on Sept. 30. USMCA will replace the North American Free Trade Agreement (NAFTA), pending approval by legislators in all three countries within 60 days.

The Aluminum Association was disappointed that there was no 232 tariffs resolution in USMCA and that the tariffs on imports from Canada and Mexico remain in effect.

Creating barriers within the North American supply chain threatens U.S. growth and investment, association officials say. “Fully 97 percent of domestic aluminum industry jobs are in mid-and-downstream production and processing,” Aluminum Association president and CEO Heidi Brock stated in a release.

“By artificially raising input prices and constraining metal supply, tariffs and quotas risk harming demand, growth and investment in the United States. We will continue to review the specifics of the agreement and work towards tariff- and quota-free trade of aluminum with our North American trading partners.”  

The “232 tariffs” were named for Section 232 of the Trade Expansion Act of 1962, which lets the U.S. president restrict imports for national security. President Donald Trump used Section 232 to impose aluminum and steel tariffs earlier this year. Canada has since countered with tariffs of its own.

“Eighty-four percent of aluminum produced in Canada, or 2.5 million metric tons, is exported to the U.S. each year, meaning the 10 percent tariff imposed by the Trump administration poses a significant threat to the Canadian industry,” according to a Bloomberg article on how with NAFTA renewed focus shifts to aluminum and steel tariffs.

Officials from Canada and Mexico will push to remove the tariffs before the USMCA agreement is signed, Bloomberg reported, and the U.S. seems willing to negotiate.

U.S.-China Trade War

Aluminum also has been caught in the trade war between the U.S. and China, according to an ALCircle article on how China’s revised 50 percent tariff on U.S. aluminum scrap to continues to hit the US scrap industry.

“The penalties are China’s latest blow to the U.S. recycling sector, after Beijing hit aluminum scrap with huge retaliatory tariffs in April as part of the trade dispute. Aluminum scrap grouped as UBC and non-UBC for pricing purposes —has been particularly affected by ongoing trade wars and sanctions,” ALCircle reported.

U.S. scrap exports to China decreased 24 percent to a total of $2.2 billion in the first six months of 2018, according to ALCircle. That was even before China increased the total tariff on aluminum exports from the U.S. from 25 percent to 50 percent on Aug. 23.

China also has tightened quality standards for imported materials to protect its environment. In seeking alternative buyers outside of China, the U.S. has become the second-largest exporter of scrap aluminum to Thailand, S&P Global Platts reported.

Changes in Consumption

Scrap aluminum is being used more in the U.S. as well.

“Our aluminum industry historically has been primary-driven. That has shifted. In the U.S., we’re [now] a scrap-based industry,” John Weritz, vice president of standards and technology for The Aluminum Association said while speaking at a recent event held by the Institute of Scrap Recycling Industries (ISRI), according to a WasteDive article about how China and tariffs are forcing market changes.

WasteDive reported: “As such, groups like The Aluminum Association and ISRI seek solutions to questions such as, ‘How do we find new applications for that scrap? How do we maintain the value of that scrap?, said Weritz. Answers to those questions gain extra significance and urgency during times of market difficulty and uncertainty.”

Uncertainty will linger at least until issues like tariffs, trade wars and consumption changes continue. All probably will last a while longer.

Photo Courtesy of The International Aluminum Association


China Drives Out Copper Processors

China’s clampdown on copper imports is driving processors to other Asian countries.

Exports could follow.

Suppliers and processors of scrap copper have sought opportunities elsewhere since China lowered the permissible contaminant threshold for copper imports to 1 percent.

Seeking to protect its environment and improve its domestic recycling efforts, China tightened restrictions on plastic, paper and copper imports as of Jan. 1. In addition to negatively impacting recyclers in the US and other nations that relied on exporting materials to China, companies inside of China that were dependent on purchasing, refining, and selling the scrap materials that were imported have been affected as well.

China has relied on imports to meet around half of its demand for copper, Reuters reported in an article on how companies are looking to process copper abroad. China uses copper for conductivity in the electronics that it produces.

Given that China shut down all processing plants that dealt below a certain threshold of pounds, the leaders of those companies are working towards moving their businesses. Many of them have already moved or are planning to move their companies to Southeast Asian countries.

Their goals are to intake as much of the excess scrap materials as possible, refine them, and then sell them to China. This is essentially what they were doing before but now they are required to ship from a separate country.

The movement of copper processors from China helps recyclers in the US because it provides a pathway for them to still export materials, even though the process will take longer. Large and small companies are using this opportunity to continue to operate their business and still have relations with China.

The current downside is that the market for copper was already growing in Southeast Asia. Even together, the potential scrap-processing destinations for the diverted copper, like Vietnam, Indonesia, Myanmar, Laos, and India, may lack the combined capacity of China.

Also, some companies are hesitating to invest in other countries in fear that China could backpedal on its tighter restrictions on imports, thereby rendering as useless any processing location elsewhere in Asia.

Related reading:

China’s Plastic Imports Shrink

China Eases Scrap Ban

China Scrap Ban Looms


Database Helps E-scrap Recycling

A new online tool could make e-scrap recycling easier.

Recyclers and scrappers can now get breakdowns of the types of recyclable materials in a device, as well as estimates of the quantities.

The Urban Mine Platform displays all available data on products put on the market, stocks, composition and waste flows for electrical and electronic equipment (EEE), vehicles and batteries. Though the data is drawn from European countries, the breakdowns also are applicable to e-scrap recycling in the US.

E-scrap recycling efforts have been slowed in part by the difficulty of extracting rare earth minerals from electronic devices. Recyclers must know which electronics contain such metals and where they are located within those devices.

Developed by the ProSUM consortium (Prospecting Secondary Raw Materials in the Urban Mine and Mining Wastes), Urban Mine Platform breaks down data by types of electronics and includes estimates of the weight of different materials, some currently recoverable and some not, used in them, Resource Recycling wrote about how the tool provides a map of valuable commodities in e-scrap.

This information is crucial for those who are already in the e-scrap market or are looking to join. Recyclers can make better purchasing decisions when they know the average or estimated weight of the precious metals in devices.

Urban Mine Platform took three years to create and used more than 800 source documents from different electronic manufacturers. The database will continue to be updated with future devices to provide users with the best information available.

The database could help make e-scrap recycling more common in the US by providing regulators and recyclers with more information on what can be recycled and how.  Some states have been expanding their e-scrap recycling initiatives to prevent waste from sitting in landfills and keep chemicals from seeping into the ground.

For instance, New York has been improving its e-scrap process in hopes of diverting e-scrap to recyclers and re-users instead of the landfill. Since 2011, it has successfully diverted 520 million pounds of e-scrap from landfills through the New York State Electronic Equipment Recycling and Reuse Act, which holds manufacturers and retailers accountable for properly disposing of their e-waste. New York plans to further boost its efforts to reduce e-waste, Recycling Today reported.

The new Urban Mine Platform e-scrap database could allow states such as New York to optimize the recovery rates of precious metals by recyclers and re-users.


China’s Plastic Imports Shrink

China is projected to import less than 1 percent of the scrap plastic that it did in the first quarter a year ago.

In issuing its first round of import permits for 2018, China established a total limit of 9,335 tons of scrap plastic, which was 99 percent less than the 3.9 million tons authorized in the initial permits for last year.

China also implemented new thresholds for contaminants as of Jan. 1, lowering the limit for plastics to 0.5 percent. The corresponding drop in demand has delivered a massive shock to the scrap industry.

In previous years, 85 percent of plastics collected in the EU, 95 percent of plastics collected in Ireland and almost 16 millions tons of materials from the US were sent to China, according to Customs Today. Businesses have lost revenue and cut jobs as China’s waste import ban has upended the global recycling industry, the newspaper reported.

China is limiting imports in an effort to protect its environment. It hopes to replace imports with domestic materials and to improve its own recycling as well.

But one of the biggest arguments against China’s new rules is that they will hurt the environment rather than help it because the standards are extremely high. Affected materials are less likely to be recycled if they cannot be imported, some experts argue. Materials that aren’t recycled will be thrown away instead.

In the US, mountains of plastics are sitting at recycling centers with nowhere to go. Or, plastics are being sent to the landfill instead of being recycled, Recycling Today reported.

“While increasing the volume of exports to Southeast Asian countries, India, and others, apart from raising domestic recycling and reuse, the low-end plastic items still have no alternative outlet other than landfills and incineration in [many] exporting countries,” Steve Wong, president of the China Scrap Plastic Association (CSPA), wrote in an email to members, according to a Recycling Today article about how China plastic scrap imports have disappeared.

“This is very concerning, as the capacity of [domestic recycling and waste destinations] in many exporting countries such as the United Kingdom, Germany, the United States and Japan, is not capable of handling the increased volume yet.”

The scrap industry also has complained that China has not allowed enough time to react to new laws, nor for the country to do so itself.  Countries that were relying on the massive amounts of exports to China are now having to export to other countries or to improve local recycling manufacturing.

China itself reportedly faces a supply gap of 5 million tons of plastic scrap, according to a Resource Recycling story on where exports displaced from China are finding a home.

Scrap imports are surging elsewhere in Asia in the meantime. Materials are being sent to Southeast Asian processors that create pellets which will then be sent to China. Other countries such as India, Thailand, and Vietnam have all significantly increased the amount of scrap plastic they import.

Though this will help offset the massive surplus of plastic scrap, there still needs to be a larger fix globally to combat the issue. Scrap plastic exporters will face an uphill battle over the next few years until the market shifts and local recycling efforts expand enough to account for the supply of materials.


Trump Gets Aluminum Report

President Donald Trump has three months to determine how far he will go to protect U.S. aluminum producers.

Trump could levy tariffs or impose quotas if he were to determine that doing so would be in the interest of national security.

Federal investigators for the Department of Commerce submitted the results of a nine-month probe into aluminum imports to the White House on Jan. 19. Trump has 90 days from then to act.

The Aluminum Association urged the president to adhere to four principles in any remedial actions that he might take.

  • Address Chinese overcapacity

  • Not interfere with relationships with critical trading partner countries, including Canada and the European Union

  • Help domestic producers and fabricators

  • Adopt a monitoring system for imports

“We expect that the report will recognize the significant role the aluminum industry plays in ensuring our nation’s security and welcome the opportunity to engage the administration on an appropriate remedy that will benefit the entire aluminum value chain,” Aluminum Association President & CEO Heidi Brock said, in the trade group’s response to the Section 232 Report on aluminum imports being submitted to Trump.

Investigators began probing aluminum imports in April 2017 to determine if they posed a threat to national security.

Though Trump has promised to protect aluminum workers from imports, particularly from Chinese overcapacity, some pro-business officials in the administration are urging restraint to avoid a run-up in metal prices or disruptions to U.S. allies, Reuters reported in an article on the aluminum probe findings

“Critics say using national security to erect steel and aluminum tariffs could trigger a trade war with China, undermine the global rules-based trading system and hurt America’s friends more than China, as well as damage global growth prospects,” David Lawder wrote for Reuters.

A Bloomberg article on the aluminum study reported, “Beijing has pushed back against U.S. talk of raising trade barriers, while many American manufacturers and metal producers have urged the White House to step in on their behalf.”

The U.S. aluminum industry supports 161,000 direct jobs and more than 700,000 jobs when indirect and induced impacts are considered, according to the Aluminum Association. The association estimates that the industry creates $75 billion in direct economic impact and $186 billion in total impact annually, around 1 percent of U.S. GDP.

Image Property of Alcoa, Courtesy of The International Aluminum Institute


2018 Steel Market Forecast

The World Steel Association projects that global steel demand will increase by 1.6 percent in 2018 to 1,648.1 million tonnes (Mt).

Demand increased by 2.8 percent in 2017,worldsteel noted in its steel market forecast for 2017.

Progress in the global steel market this year to date has been encouraging,” T.V. Narendran, Chairman of the worldsteel Economics Committee, said. “We have seen the cyclical upturn broadening and firming throughout the year, leading to better than expected performances for both developed and developing economies, although the MENA region and Turkey have been an exception.”

Statistically, the global steel market has been affected by the closure of most of China’s outdated induction furnaces in 2017. Such furnaces generally were not captured in official statistics but with their closure the demand from this sector of the market is now satisfied by mainstream steel makers and therefore captured in the officials statistics for 2017, worldsteel explained.

Consequently, the nominal growth rate for steel demand in China increased to 12.4 percent or 765.7 Mt, researchers noted. Disregarding this statistical base effect worldsteel expects that the underlying growth rate of China’s steel demand for 2017 will be 3 percent, which will make the corresponding global growth rate 2.8 percent, according to worldsteel’s short-range outlook.

“In 2018, we expect global growth to moderate, mainly due to slower growth in China, while in the rest of the world, steel demand will continue to maintain its current momentum,” Narendran said.
“So, world steel demand is recovering well, driven largely by cyclical factors rather than structural. The lack of a strong growth engine to replace China and a long term decline in steel intensity due to technological and environmental factors will continue to weigh on steel demand in the future.”


What is your steel market forecast for 2018? Share it with us through comments or complete our Scrap Metal Market Outlook.

Images courtesy of worldsteel


Mutilated Coin Program to Resume

Recyclers will once again be able to make money by redeeming recovered coins.

The U.S. Mint is relaunching its Mutilated Coin Redemption Program after a two-year hiatus.

The Mint suspended the program in November 2015 due to counterfeiting fears. Recycling industry officials have since pushed for its return.

“The resumption of the U.S. Mint’s Mutilated Coin Program is a significant victory for the many recyclers that rely on the recovery of coins as part of their business,” Robin Wiener, president of the Institute of Scrap Recycling Industries (ISRI), stated in a press release hailing the program’s resumption.

“ISRI is extremely grateful to the Mint, which worked closely with the industry to better understand the sorting and separating technologies used in scrap facilities, global trade flows, and other critical issues that will allow it to effectively implement this program.”

The program is worth millions of dollars annually to the recycling industry, according to ISRI. Recycling facilities have been recovering coins, like loose change left in cars or money from vending machines and coin-operated laundry machines, for decades. Advances in technology have made it even easier to recover large amounts of coins, thereby increasing the importance of the mutilated coin program.

“The recycling industry is committed to working closely with the Mint on the success of this program,” Wiener said. “We share the common goal of the recovery and recycling of coins while protecting the integrity of the program.”

The Mint formally announced the program’s return in the Federal Register on Dec. 20. It also set certification procedures for program participants and revised the redemption rates for U.S. coins based on denomination and composition.

Recyclers and others who submit coins for redemption will receive $1.81 per pound for copper-plated zinc coins, Coin World reported in an article about the mutilated coin redemption program. The Mint will pay $1.4585 per pound for cents or mixed submissions of both bronze and copper-plated zinc cents.

Coin World also reported that the Mint announced it would not accept fused coins and “‘will also not accept mixed coins (coins of several alloy categories presented together) for redemption, with the exception of bent or partial one-cent coins and $1 coins that are presented in mixed years.’”  

Some estimates have put the value of lost coins in the U.S. at more than $60 million per year, Waste Dive reported, calling the resumption of the mutilated coin program “a welcome piece of news for companies that are constantly looking for ways to maximize value from the resources they're processing.

No official date has been announced for the mutilated coin program’s resumption. Click here to read the final rules in the Federal Register.



Tax Reform May Help Recyclers

Recyclers could benefit from the tax reform bill that has been signed by President Donald Trump.

The reforms include a reduction in the corporate tax rate as well as changes in how certain types of income and expenses are handled.

Legislators lowered the corporate tax rate to 21 percent from 35 percent. They also reduced the amount of taxes that non-corporations, such as partnerships, would pay as pass-through companies.

Additional takeaways for the recycling industry include the following, according to Resource Recycling.

  • Immediate and full expensing is allowed on qualified equipment purchases from Sept. 2017 through 2013 before expensing allowance gradually phases out in subsequent years. Certain recycling industry equipment should qualify, according to the Institute of Scrap Recycling Industries (ISRI).

  • Cap for deducting qualified asset purchases by small businesses is doubled to $1 million.

  • Corporate alternative minimum tax is repealed.

  • Tax-exempt private activity bonds remain. Recycling facilities often use such bonds for qualifying capital investments, Resource Recycling reported.

The House and the Senate approved the tax bill on Dec. 19 and President Trump signed it on Dec. 22. You can click here to read the Tax Cuts and Jobs Act


E-scrap market expanding

Efficiently extracting precious metals is key to profitability for recyclers.

The growing market for e-scrap shows no signs of slowing as virtually everything these days has some sort of tech component.

Recycling electronics reduces harmful waste and chemicals. It also helps meet the demand for the materials needed to produce new electronics.

For example, our cars utilize more electronics today than they did 10 years ago, like safety and blind-spot detection devices. Technology will become even more prevalent as automobile manufacturers like Tesla use it to support their self-driving, electric vehicles.

Here are just a few examples of how the market for e-scrap is expanding.

  • The amount of global e-waste is expected to grow by 8 percent per year. (The Balance)

  • The value of e-scrap generated globally is projected to grow at about 23 percent per year, reaching more than $76 billion by 2022. (Recycling Today)

  • The e-scrap recycling industry provides a boost of approximately $20.6 billion, including exports of $1.45 billion, to the U.S. economy and employs more than 45,000 full-time employees. (Institute of Scrap Recycling Industries)

There is a downside, however. Extracting the precious metals that are inside electronics is difficult. This is where the relationship between the recyclers and reclaimers is important.

  • The best way to make the process of recycling electronics as smooth as possible is to have a useful strategy for dismantling.

  • In order to receive the highest yield, you must prepare the materials first and separate if necessary. This can be heavily labor intensive so you have to make sure that what you are purchasing is worth the labor cost.

  • Some of the e-scrap contains other recyclable materials such as steel, aluminum, and wires. These materials should be removed first and recycled separately.

Recycling electronics also can be quite hazardous if not done properly. It is crucial to learn about what materials and chemicals can be harmful in order to prevent danger to employees. Some examples of these chemicals are beryllium, cadmium, and mercury.

You might be able to use thermal reduction to reduce your labor costs for extracting precious metals. This process is efficient and less harmful to the environment as a whole.

However, if you are not near a thermal reduction facility it can be quite costly to send all of your e-scrap to them. E-scrap overall can be a profitable venture but the benefits must outweigh the costs.


China eases scrap ban

China’s recent announcement that it will not be as strict in banning scrap materials as it once indicated has not resolved the recycling industry’s concerns.

Officials still worry that the tightening of scrap supplies to China could affect the industry worldwide.

China’s move to ban or reduce its paper and plastic imports in the upcoming years remains a major concern among scrapyard and recycling centers because the country has long been a primary consumer of  such supplies.

Citing environmental concerns, China announced in August that it would not accept certain materials if they exceeded a proposed 0.3% threshold for contamination. This was a large change given that the limit was previously 1.5%. Furthermore, industry experts  viewed the proposed target as  impossible to achieve.

Though China still plans to reduce the amount of harmful waste that enters the country and to tighten the laws around scrap imports, it has indicated that it would raise the proposed threshold from 0.3% to as much as 1%, according to a mid-November response to China’s proposed contaminants threshold from the Institute of Scrap Recycling Industries (ISRI).

As of Nov. 16, the following standards would apply to shipments arriving in China on or after March 1, 2018, according to ISRI.

  • Smelt Slag                    0.5%

  • Wood                            0.5%

  • Paper                            0.5%

  • Ferrous                         0.5%

  • Nonferrous                    1.0%

  • Electric Motors              0.5%

  • Wires and Cables               0.5%

  • Metal and Appliances    0.5%

  • Vessels                            0.05%

  • Plastic                              0.5%

  • Autos                               0.3%

Though the higher thresholds were good news for the industry, officials remain frustrated over the large decrease in prices that resulted from China's original plan.

“China’s proposed ‘carried waste’ thresholds that, like their earlier proposals, are not in line with standards followed globally by the recycling community and our industrial consumers,” ISRI President Robin Wiener said.

“Although ISRI is heartened that the new proposal moves away from the 0.3% threshold, the new levels are still of great concern. ISRI is reviewing the documents carefully and will submit comments through the WTO and directly to the Chinese Government.”

The industry standard for contamination of paper entering China has been 1% to 5% depending on the grade. This standard was created through the collective efforts of the recycling community as well as a reflection of manufacturing standards. Officials say that China should adhere to these standards and not enact such a strict stance on the 1%.

Looking ahead, industry leaders will focus on how China enforces its new rules. Currently, there are containers that arrive in China that do not meet the current standards and will definitely not meet the future ones.

China is phasing out its small paper mills and putting more effort towards large ones as well, Recyling Today reported in an article about the country dialing back contamination restrictions.  It has announced that Chinese mills with capacities less than 300,000 metric tons per year will not be issued import permits next year. Also, only companies that process scrap will be allowed to receive a permit, which eliminates any type of broker or middleman.


Steel Production Still Rising

Steel production rose again in September, both in the US and abroad.

At 74.8 million net tons, domestic raw steel production was 3.8% higher than a year ago for the year-to-date through Oct. 28, according to American Iron and Steel Institute statistics. Capability utilization was at 74.6% compared with 72.2% a year ago.

World crude steel production increased 5.6% to 141.4 million tonnes (Mt) in September from the same period in 2016, the World Steel Association (worldsteel) reported. Production also rose by 5.6% through the first nine months of 2017, reaching 1,266.9 Mt globally.

Strong production in China contributed to the overall increases. China’s production increased 5.3% to 71.8 Mt in September and 6.3% to 638.7 Mt for the first nine months.

The US produced 8.6% more, 6.7 Mt in total, of crude steel in September than it did last year. US production was up 3.1%, to 61.5 Mt for the first nine months, according to worldsteel.

Regionally, for the first nine months, crude steel production increased by:

  • 2.0% in Oceania;
  • 3.5% in North America;
  • 4.1% in the European Union;
  • 5.9% in Asia;
  • 8.0% in South America;
  • 13.5% in Other Europe countries;
  • 13.8% in Africa; and
  • 14.2% in the Middle East.

Steel production was flat (0.0 percent) in the Commonwealth of Independent States (CIS).

Capacity utilization among the 66 countries that report to worldsteel was 73.5% in September, which was 2.8 percentage points higher than a year ago and 0.6 percentage points more than in August.

Photo courtesy of worldsteel


Nickel Prices Fluctuating

See full chart
The steady increase in global demand for stainless steel scrap has not been reflected in the price of nickel.

Given that nickel is used in making stainless steel, an overabundance of the former being mined in Asia has affected its price.

The price of nickel was great in early December 2016, fetching $11,675 per metric ton at its peak. At the beginning of 2017 however, the prices were strong but had declined to $9,375 by the end of January. The price continued to decline until around early July. Prices rose until early September before dropping again. The price stood at $11,665 as of Oct. 17.

Why has the price fluctuated so much?

At the ISRI2017 convention in New Orleans in April, Joe Pickard who is the chief economist and director of commodities at ISRI spoke about the flows of nickel and stainless steel.

The flow of nickel closely correlates to the price of nickel, Pickard said. The more that nickel flows, the better the prices are. Recent price drops stem from China’s decrease in scrap imports. China’s share of the global import market for stainless steel has dropped to 6% but it still has a major influence on the industry and price.

Historically China imported large amounts of stainless steel scrap from the US. But it has recently started getting more of its materials through nearby countries in Asia or from mines that produce nickel. The overabundance of nickel has led to China choosing to produce new over recycling old.

On top of that, China is also importing more nickel pig iron from Indonesia and the Philippines. The acting secretary of the Department of Environment and Natural Resources in the Philippines, Regina Lopez, had been holding China back.

Lopez had ordered 28 of the 41 mining companies in the Philippines to shut down earlier in the year due to alleged violations of environmental regulations. When her confirmation to become the official secretary got rejected, the price of nickel dropped right after.

The price of nickel has rebounded despite the increased production from mines.

As far as stainless scrap goes, market leaders have a somewhat optimistic outlook given that the demand for stainless scrap is high. They say that the US market is still aggressive but will face some major challenges through the rest of 2017.


Nonferrous Exports Surging

See full chart
Exports of nonferrous scrap have boomed this year.

Nickel, copper, and aluminum have been particularly strong.

Nickel exports were 31% higher through the first eight months of 2017 than in the same period a year ago. The nickel waste exported totaled $80.5 million through August of this year compared to $61.4 million in 2016. A majority of the nickel was exported to Canada and went through the Buffalo customs district.

Copper exports surged by 20% through August. A total of $1.74 billion was exported in 2017 compared to $1.45 billion in 2016. The largest importer of copper was China, which accounted for $1.053 billion. This amount was 21% higher than the same period in 2016.

Aluminum exports also rose over the first eight months of 2017, increasing by 16% from a year ago. Exports increased by $190 million, from $1.20 billion in 2016 to $1.39 billion in 2017. China also was the largest receiver of the imported aluminum with a total value of $724.7 million. This accounted for more than half of the total US shipments.


Flooding Impacts Auto Market

Automotive recyclers and salvage yards may be deluged by vehicles damaged by the hurricanes that have hit southern states in recent months.

Massive flooding in Houston and surrounding areas hit by Hurricane Harvey caused widespread damage to vehicles.

Cox Automotive estimates that 300,000 to 500,000 cars were damaged, according to a Steel Market Update report on hurricanes’ effects on auto scrap markets. Some vehicles will be repaired while others will be salvaged.

Both repaired and scrapped vehicles impact the salvage yard market. Typically when a vehicle is repaired, recycled parts will be used when a brand new part is not needed. The percentage of recycled parts used increases as vehicles age. For instance, a 4-6-year-old car being repaired uses 59% non-OE parts, including recycled ones.

Cox Automotive estimates that 20 percent of the damaged vehicles will be repaired and that the others will be replaced. This means that around 20 percent of the vehicles will require some recycled parts and that 80 percent of vehicles will be up for auction for salvage yards, which could remove all useable useful parts.

The automotive industry as a whole is expected to take a hit due to the massive number of damaged vehicles that were either at dealerships or warehouses. This means that the people who have damaged cars now also have a tough time getting a new car because the local car dealerships are often impacted the same. The effect will be particularly acute given that Texas is the nation’s second-largest market.

However, it is projected that the industry will end up with positive growth due to the massive number of vehicles that will need to be purchased or repaired. Texans account for 9 percent of the vehicles sold retail in the U.S, according to a Detroit News article on how the auto industry feels Harvey’s impact. They also account for 14 percent of full-size pickup sales.

One Houston-based dealership experienced 700 calls over a few days from people who needed to bring their damaged vehicles in for repair. The automotive industry will likely see a similar boom that happened after Hurricane Sandy hit the Northeast. Car sales spiked 49 percent in the month after Sandy. That surge lasted two months.

Repairs and replacements could continue to drive the industry in fast-growing Houston, which is one of the nation’s largest home-building markets.


Hurricanes Disrupt Scrap Supply

The bigger the disaster, the bigger its effects on the scrap industry.

When homes are destroyed, buildings damaged and automobiles wrecked, massive amounts of materials are extracted and the demand for rebuilding supplies surges. Typically, the demand for materials exceeds the supply extracted from the damaged areas.

The U.S. scrap industry has been greatly impacted in recent months as two major hurricanes have hit southern states. Hurricane Harvey hit Texas and surrounding states. Then Hurricane Irma struck Florida and Georgia.

The extensive damage wrought by the hurricanes caused large shifts in supply and demand for materials, like previous storms have done. But the economic impact of the storms was compounded by where they hit.

Hurricane Harvey was particularly powerful in Houston, whose port handled roughly 68% of Gulf Coast container traffic in 2016, according to MetalMiner. Since January 2017, 40% of iron and steel pipe and tube imports had come into the Port of Houston. Container ships were diverted and trade was effected when the port was closed during the storm.

Also, because it struck Houston, in addition to its impact on logistics Hurricane Harvey had an outsized effect on the rebuilding process, which usually drives the scrap economy after a disaster. Typically, when a major storm hits a highly populated area the first grades of scrap to come out are light iron and shreddables, scrap dealers stated in an S&P Global Platt’s article on the storm’s impact on steel scrap. Then come automobiles, non-ferrous grade scrap, and heavy steel.

Despite the large volume of resources that are extracted from the storm, there is still a deficit.  More materials are needed to rebuild than are being extracted from the damage. This combined with the fact that Houston has been the largest market for newly constructed homes means that the demand for materials will surge once rebuilding begins.

Scrap prices were already projected to be bullish in October. With increasing demand due to the large amount of materials that will be needed for rebuilding , the impact of the recent hurricanes should support these projections.


Plan Ahead for a Hurricane

Preparing a scrapyard for a hurricane should begin well before the winds start whipping.

Creating, reviewing and revising an emergency response plan prior to storm season provides the optimal protection.

In planning ahead, you can react sooner and avoid potentially disastrous oversights when a storm threatens. For example, knowing how you will secure equipment before a storm hits and communicate with employees afterward so that they know when it is safe to return will help you better protect your business and your people.

“The time to plan is always before,” said Terry Cirone, vice president of safety for the Institute of Scrap Recycling Industries. “So, if you could be in the path of a storm get out that plan, dust it off and review it.”

Cirone advises recycling centers to be particularly proactive in preparing their communication plans, controlling mold, and protecting their records. “It’s all about business continuity and protecting your assets.”

Some businesses recently impacted by Hurricane Harvey failed to protect their files from water damage, she said. “If they get so flooded out or water-logged that you can’t utilize them, then that’s a problem.”

With Hurricane Irma’s arrival imminent and additional storms looming, Cirone urged businesses to prepare early and act quickly to stay safe.

Here are some suggested steps.

  • Review responsibilities for preparations and response with everyone, including senior management.

  • Establish processes for storm-related communication between employees and managers, such as how to announce when the business will close and re-open as well as how employees can report that they cannot make it to work. Update all related phone numbers.

  • Secure equipment or materials that could be sent flying by strong winds.

  • Shut down electrical equipment that could be exposed to flooding.

  • Remove low-lying files and other property that could be damaged by high waters.

  • Check for mold caused by flooding. Hire experts to treat affected areas like walls and carpets if needed to protect the health of your employees and customers.

See ISRI’s Safety Tips for Hurricane and Flooding Cleanup and Recovery Work for additional information.



China Scrap Ban Looms

China intends to ban certain scrap from being imported, citing environmental concerns.

Recycling industry leaders expect more bans to follow.

The impact of restrictions could be significant for US recyclers because China is the largest receiver of exported scrap commodities.

Scrap organizations are on edge.

On July 18, the Institute of Scrap Recycling Industries stated:

“More than 155,000 direct jobs are supported by the U.S. industry’s export activities, earning an average wage of almost $76,000 and contributing more than $3 billion to federal, state, and local taxes. A ban on imports of scrap commodities into China would be catastrophic to the recycling industry.”

To date, China has told the World Trade Organization that it plans to ban the import of certain scrap materials by the end of 2017, including unsorted mixed paper, most scrap plastics, metal slags, and drosses. Scrap paper accounted for $1.9 billion of the more than $5.6 in scrap commodities that were exported from the United States to China in 2016. Scrap plastics comprised $495 million.

The restrictions that have been announced so far will impact scrap paper more than plastics due to China having already cut back on its import of scrap plastics over the past few years. The exact impact on the US scrap industry is still uncertain but some possibilities or prediction have been made, according to a Waste Dive report on China’s scrap ban surprise.

The US tends to export its scrap because of the lack of technology to optimize sorting and extracting. Without the ability to just send the banned products overseas, companies will have to push for better technology to optimize their extraction levels. Or, companies could choose not to become more efficient. If that were to occur, consumers could be less likely to recycle because prices could drop due to excessive supply of scrap materials that can’t be exported .

In having to adjust and determine where all of the banned scrap will now go, the US may work towards making better use of its scrap. This may be done through using scrap to produce more products or, as  mentioned previously, by finding better ways to extract as much of the resource as possible.

Using recycled materials for production of goods is often cheaper than creating the material new. This mindset could align with the Trump Administration and its plans to bring manufacturing jobs back to the US. There already have been efforts to start improving the efficiency of recycling and scrapping through the use of technology. This is accomplished by producing machines and processes that allow for more of a material to be extracted from scrap.

One of the worries about the restrictions that China is initiating is that other scrap may be banned as well. This was confirmed shortly after China released the details on its ban on plastics, mixed paper, and other materials.

China has mentioned that it also plans on banning wire, motors, and some bulk metal scrap in 2018, Reuters reported. One of the wires that will be banned is copper wire. This news sent the price of copper up with an increase of 5% per tonne in some places.

Additional news:

Waste Dive: What comes next after China’s Scrap Ban Surprise?

Reuters: China reviewing copper scrap imports; may call halt in 2018: notice

Institute of Scrap Recycling Industries: ISRI Statement on China's Intent to Ban Certain Scrap Imports


Using Yard Management Reports to Reduce Risk for Scrapyards

Running a scrap metal business requires a lot of your attention.

Whether you own the recycling center or manage it, you have to know what is happening anywhere at any time.

You have customers to service, sales to make, employees to supervise and laws to follow—just to name a few of your responsibilities. With so much to do, you inevitably must count on others to help.

Review the following scrap yard management reports at the end of each day to spot any problems.

1)      Cash Register Activity. If you are the only person who runs the cash register, then you should know what cash has been added or withdrawn during the day, and why.

Demand the same accountability from your cashiers. Require that they record each transaction they make in a ledger, along with their initials or name. Or, use software to collect and store this information.

From cash taken out to pay for lunch for employees to mid-day deposits when the till is running low, you should be able to account for every transaction, whether it involves a direct purchase of materials or not.

Recording all transactions during the day and reviewing them at the end will show you who has spent money and how. Check your opening balance, calculate your transaction totals and then confirm your closing balance to ensure that you have accounted for all of your money.

Investigate any discrepancies for possible mistakes or misappropriations of funds. 

2)      Purchases. You should pay what you owe—but not a penny more than the ticket price. Tickets show how much you should have spent—but not how much you actually have spent.

Record each transaction in a ledger, including the weight of the material(s) and the amount paid. Require your cashier(s) to do the same. Then cross check those transactions against ticket totals.

Ensure that neither you nor your cashier paid “$8” for a “$6” ticket that was hard to read, for example. Or, that a cashier didn’t pay “$50” when the ticket should have been “$5” because they read the price for a material to be “.50” instead of “.05” when buying 100 pounds. You can also use software to automatically calculate ticket totals and amounts paid.

3)      Canceled Purchases. Record each voided transaction and the reason for canceling. This will help you spot recurring errors. You could also use software to track voided transaction so that you can see if an employee may need training.

If you spot canceled purchases or overpayments that you were not aware of, investigate the reasons and respond accordingly. If it was an honest payment mistake by a long-time, dependable employee, then perhaps you point it out so that they are not likely to repeat it in the future. But if it was theft or incompetence then you may be able to recoup and/or prevent future losses by terminating an employee, and possibly seeking reimbursement.

Running a scrapyard requires you to shift your attention from one stressful situation or pressing problem to another, rapidly and frequently. Don’t miss honest errors or dishonest theft, either of which could be costly.

Review the three reports above each day to minimize risk.


Steel Production Keeps Increasing

Steel production remains strong domestically and abroad.

Domestic raw steel production was up 4.4 percent for the year-to-date through March 25, according to American Iron and Steel Institute statistics. Capability utilization was at 73.4 percent compared with 71.3 percent a year ago.

World crude steel production increased 4.1 percent to 126.6 million tonnes (Mt) in February from the same period in 2016, the World Steel Association (worldsteel) reported. A 4.6 percent increase in production in China contributed to the overall increase. 

The US produced -1.0 percent less, 6.4 Mt in total, of crude steel in February than it did last year. There were 29 days in February 2016.

Steel production increased by:

  • 24.7 percent in Oceania;
  • 18.2 percent in Africa;
  • 15.8 percent in Other Europe countries;
  • 5.7 percent in the Middle East;
  • 5.1 percent in Asia; and
  • 1.5 percent in South America.

Steel production was flat (0.0 percent) in the Commonwealth of Independent States (CIS) and North America. It decreased by -0.6 percent in the European Union.

Capacity utilization among the 67 countries that report to worldsteel was 70.3 percent in February, which was 4 percentage points higher than a year ago and 1.1 of a percentage point more than in January.

Year-to-date, global steel production was up 5.8 percent through February, worldsteel reported.

Photo courtesy of worldsteel


Steel Production Starts Strong

Steel production has surged in early 2017.

Domestic raw steel production was up 4.7 percent for the year-to-date through Feb. 25, according to American Iron and Steel Institute statistics. Capacity utilization was at 73.0 percent compared with 70.8 percent a year ago.

World crude steel production increased 7.0 percent to 136.5 million tonnes (Mt) in January from the same period in 2016, the World Steel Association (worldsteel) reported. A 7.4 percent increase in production in China contributed to the sharp rise overall. Researchers attributed the improvement in China largely to the fact that there was a “marked dip” in production in January 2016.

The U.S. produced 6.5 percent more (6.9 MT) of crude steel in January than it did last year.

Steel production increased by:

  • 15.6 percent in Africa;
  • 13.5 percent in the Middle East;
  • 11.6 percent in South America;
  • 11.5 percent in Other Europe countries;
  • 11.4 percent in the Commonwealth of Independent States (CIS);
  • 7.1 percent in Asia;
  • 6.2 percent in Oceania;
  • 4.0 percent in North America; and
  • 2.4 percent in the European Union.

Production did not decrease in any of the regions tracked by worldsteel. Capacity utilization among the 67 countries that report to the organization was 68.5 percent in January, which was 3.4 percentage points higher than a year ago and 0.9 of a percentage point more than in December.

Photo courtesy of worldsteel.


Steel Market Forecast 2017

The World Steel Association projects that global steel demand will increase by 0.5 percent in 2017 to 1,510  million tonnes (Mt).

Demand increased slightly in 2016 but weakness in investment globally is hampering a stronger recovery, worldsteel noted in its steel market forecast for 2017.

Steel demand is projected to decline by -2.0 percent in China in 2017 but will start a moderate recovery in Brazil after two consecutive years of double-digit contraction, according to worldsteel. The association projects demand to expand by 4.0 percent in emerging and developing (excluding China) economies and by 1.1 percent in developed economies.

In 2016, world crude steel production increased by 0.8 percent to 1,628.5 Mt, worldsteel reported in its most recent steel market update.

Annual steel production increased by:

  • 7.0 percent in the Middle East;
  • 2.1 percent in Australia/New Zealand;
  • 1.6 percent in Asia; and
  • 0.8 percent in the CIS.

Production decreased by:

  • -10.6 percent in South America;
  • -4.4 percent in Africa; and
  • -2.3 percent in the EU.

North American production remained flat from 2015 to 2016 while the US produced -0.3 percent less than in 2015, worldsteel reported. China’s annual output rose by 1.2 percent and its share of world crude steel production increased from 49.4 percent in 2015 to 49.6 percent in 2016.

In December 2016, crude steel production increased by 5.5 percent compared to the previous year. The crude steel capacity utilization ratio of the 66 countries that reported to worldsteel was 68.1 percent in December, 2.8 percentage points higher than in the same period a year ago. The average capacity utilization in 2016 was 69.3 percent compared to 69.7 percent in 2015, according to worldsteel.

Iron ore prices of $80/ton in December were nearly double those of a year earlier, due partially to strong steel demand in China, according to a January 2017 Commodity Markets Outlook from World Bank. “However, prices softened into January, with China’s inventories rising and seasonal demand expected to weaken,” researchers wrote.

World Bank researchers also noted that iron ore exports from Australia and Brazil hit record levels in November and that new low-cost capacity is expected online this year. “These considerations, along with rising scrap supply and an expected slowdown in China’s steel production, are expected to pressure prices downward and force high-cost production to close. Key uncertainties are the strength of steel demand and iron ore production in China,” according to the World Bank report.

Uncertainty related to government measures meant to stabilize China’s decelerating economy will continue to weigh on the steel market, according to a January 2017 Steel Industry Stock Outlook by Zacks Equity Research. “Although the steel industry will remain under pressure for some time, it is certainly expected to grow thereafter on the back of the automotive and construction industries,” Zacks reported.

What is your steel market forecast for 2017? Complete our
Scrap Metal Market Outlook.

Photo courtesy of worldsteel.


Prepare Your Scrap Yard for 2017

Another year is almost finished.

When it comes to scrap yard management, assessing how you fared this year will help you prepare for 2017.

Despite a post-election uptick, scrap metal prices largely hampered the recycling industry during 2016. Just the fact that you still open your doors every day means you have fared better than the many scrap yards that have closed during depressed market conditions.

But do you know just well you have fared? And, how you expect to improve in 2017?

Robust reporting and proactive planning are essential in scrap yard management. Determining your successes and failures will help you build on the former while avoiding the latter.

Follow these seven scrapyard management tips to finish 2016 strong and start 2017 even stronger.

1) Catch up on your bookkeeping.
Ensure that you have an up-to-date accounting of your revenue and expenses. Knowing how much you’ve taken in and how much you’ve spent will simplify tax season and better position you to make sound decisions during the rest of 2016, according to end-of-year business planning tips from FreshBooks, a provider of online accounting software.

2) Complete your quarterly tasks.
The year may be ending but so is the quarter. And, because of their nature, you can’t have a full year unless you have four quarters so you must close out the last three months of 2016 as you did the preceding three quarters.
Your quarterly accounting tasks should include reviewing quarterly payroll reports and making any necessary payments, as well as computing and paying estimated income tax, according to a small-business accounting checklist from QuickBooks. Your payroll services provider should prepare and file reports but you should verify their accuracy. You also should consult with your accountant on income tax payments, QuickBooks advises.

3) Fulfill your annual accounting responsibilities.
QuickBooks includes four annual accounting tasks in its checklist.
1. Review past-due receivables. Determine whether you can collect receivables that are significantly past due or will send them to a collection agency or write them off as a deduction.
2. Review your inventory. Decide if you will write-down the value of unsold items for a deduction on your year-end taxes. 
3. Complete IRS compensation forms. Fill out an IRS Form W-2 for any employee and a Form 1099 for any independent contractor whom you paid a total of $600 or more during the year. You have until Feb. 1 to mail these annual earnings reports to the people who worked for you. You must file with the IRS by Feb. 28.
4. Approve full-year financial reports and tax returns. When it comes time to file your taxes, review your financials and returns for accuracy.

4) Do year-end tax planning.
FreshBooks suggests that you meet with an account before the year ends so that you can follow any advice that they may have for reducing your tax bill. For example, you may be able to purchase some equipment for your yard that would help defray a larger-than-expected profit.

5) Run management reports.
Even if you did well this year, you will want to do better in 2017. But you can’t plan to improve unless you know how you did.
If you haven’t already, run reports like:

  • Materials bought;
  • Materials sold;
  • Transactions by customer;
  • Equipment inventory; and
  • Customer service time. 

Establish benchmarks with these reports so that you can compare your progress in 2017.

6) Plan for 2017.
Scrapyard management doesn’t figure to be any easier next year but you can be more effective. Strategic planning is crucial for capitalizing on opportunities that have arisen or may develop. Start by clarifying the business you are trying to build, according to tips for year-end strategic planning from Inc. magazine. Write out your vision for what your recycling center will look like three to five years from now. Be specific. Quantify sales and describe it qualitatively with criteria like your marketplace differentiators. Then back out your strategic plan based on your goals.

7) Re-energize.
Starting next year strong will require you to be ready. Recharge your batteries by taking time off. Notify employees and customers well in advance though so that they can plan accordingly. When you return, pour your energy into 2017. 

The past year has been difficult for many scrapyards. However, you can make the most of 2016 by thoroughly and candidly assessing your performance with a comprehensive year-end business review. Then proactively plan to do better in 2017.

Want to learn more about how ScrapyardPRO can help you run year-end reports? Contact us at (888) 552-0401 or request a demonstration.


Aluminum Overcapacity Targeted

U.S. Sens. Rob Portman (R-OH) and Sherrod Brown (D-OH) have urged the U.S. Trade Representative (USTR) to bring a World Trade Organization (WTO) case against China in an effort to address aluminum overcapacity.

“Exponential growth in China’s aluminum sector, fueled by heavily subsidized, government-directed lending, has had significant implications for the U.S. aluminum industry,” contributing to the loss of 15,000 aluminum production jobs in the past decade, including 1,500 this year alone, the senators wrote to USTR Ambassador Michael Froman on Oct. 21, according to a jointly issued press release.

 “China has unfairly subsidized its aluminum industry – it’s not competing, it’s cheating,” Brown stated in the release. “Enforcing our trade laws will ensure that U.S. aluminum manufacturers, the best in the world, have the opportunity to compete on a level playing field.”

Each year since 2008, China has increased capacity and production beyond what its domestic market demands, prompting a 35 percent drop in global aluminum prices, according to the letter to Froman. “With significant government support, Chinese companies are allowed to operate at losses or otherwise independent from market considerations,” the senators wrote.

A panel of recycling industry representatives addressed concerns about the aluminum market, including the “significant decline in aluminum scrap activity,” at the ISRI Commodities Roundtable 2016 in September, Recycling Today reported in a story about how aluminum struggles with overcapacity.

Panelists shared steps that scrap metal recyclers could take to lessen their exposure to the volatility in the aluminum markets as well as forecasts of market conditions. Though long-term issues remain, aluminum scrap prices could get a short-term boost if inclement weather causes shortages and auto shredders scale back operations as ferrous prices decline, panelists said.

Photo by JAXPORT


Steel Production Slows in 1st Half

Crude steel production was flat in June and down -1.9 percent in the first six months of 2016, the World Steel Association (worldsteel) reported in its most recent steel production update.

First-half production increased by 0.6 percent in the Commonwealth of Independent States (CIS) but declined by:

  • -0.6 percent in North America;
  • -1.0 percent in Asia;
  • -3.2 percent in the Middle East;
  • -6.1 percent in the European Union (EU); and
  • -13.8 percent in South America.

In June, production increased by 1.4 percent in Asia but declined by:

  • -0.6 percent in the CIS;
  • -1.2 percent in North America;
  • -3.0 percent in the Middle East;
  • -5.3 percent in the EU; and
  • -11.1 percent in South America.

China produced 69.5 million tonnes (Mt) of crude steel in June, 1.7 percent more than a year ago. But its first-half production was down by 1.1 percent.

“The economic environment facing the steel industry continues to be challenging with China’s slowdown impacting globally across a range of indicators contributing to volatility in financial markets, sluggish growth in global trade and low oil and other commodity prices,” worldsteel Economics Committee Chairman stated in a press release announcing the organization’s Short Range Outlook (2016-2017). “The global steel market is suffering from insufficient investment expenditure and continued weakness in the manufacturing sector.

Demand will contract in China in 2016 and 2017 but is projected to increase in all other markets next year, according to worldsteel’s projections. Worldsteel has proposed key principles for excess capacity and structural adjustment in the steel sector, including removing barriers to efficient mergers. The association’s members represent approximately 85 percent of the world’s steel production.

What is your steel market forecast? Click here to take our Scrap Market Outlook Survey.

Photo courtesy of worldsteel.


Scrapyards Project Improvements but Material Prices still a Concern

Recycling center operators project slight increases in scrap metal prices over the coming year.

Ferrous and non-ferrous prices should improve slightly within the next three, six and 12 months, according to respondents to the ScrapyardPRO Scrap Metal Market Outlook.

Respondents continue to worry about the economy and material prices though, and recent reports indicate that their concerns may be justified.

China’s economy, which may be the predominant influencer of scrap prices in today’s global marketplace, grew at its slowest pace (6.9 percent) in 25 years in 2015. “The economy faces relatively big downward pressures,” a Chinese government official said in announcing plans to lay off 1.8 million coal and steel workers, including 500,000 of the latter, at state-owned-enterprises, Reuters reported.

China’s crude steel production decreased by 7.8 percent in January, compared to the same period a year ago, the World Steel Association (worldsteel) reported. Globally, crude steel production declined 7.1 percent in January.

However, reduced output and capacity could help boost scrap metal prices by more closely aligning supply with demand.

What is your forecast for scrap metal prices? Share it with us by completing the ScrapyardPRO Scrap Metal Market Outlook.


Steel Market Forecast for 2016 Slightly Optimistic

Steel market forecasts for 2016 call for a slight rebound in demand, which could boost depressed scrap metal prices.

Recovery is contingent upon consumption increasing in China, where demand and prices have dropped precipitously.

The World Steel Association (worldsteel) projects global steel demand to increase by 0.7 percent in 2016 after decreasing by 1.7 percent in 2015. “We expect the current headwinds to moderate in 2016 but this is based on a belief that the Chinese economy will stabilize,” World Steel Association Economics Committee Chairman Hans Jürgen Kerkhoff stated, in a release announcing the worldsteel Short Range Outlook 2015-2016.

Crude steel production declined by 3.1 percent in October in China compared to the previous year, mirroring a decrease of 3.1 percent in world crude steel production between the same periods, according to a worldsteel report on October 2015 crude steel production.

Steel prices have decreased by more than 33 percent in China in 2015, reaching a record low of 1,733 Chinese yuan (about $272) on Nov. 18.  “With China producing 800 million tons of steel a year—four times more than any other country has ever produced—the sector is in severe overcapacity of some 400 million tons as construction slows in the world's second largest economy,” CNBC reported in an article on why China steel prices hit record lows.

Scrap metal prices have also plunged. Sims Metal Management cited a 30 percent drop in ferrous prices from mid-September to November in announcing cost-cutting initiatives for North American scrapyards on Nov. 18.

When do you expect scrap prices to increase? And what is your steel market forecast for 2016?

Tell us and we will let you know how your predictions compare to those of other recycling industry professionals. Click here to take our Scrap Market Outlook Survey and request a copy of the results.


Photo courtesy of worldsteel.


Scrapyards Squeeze Spending

If tough times don’t last they certainly linger.

A prolonged slump in scrap prices is prompting recycling centers to scale back or sell—and the pressures are likely to continue.

The total value of U.S. exports of all scrap commodities to China, whose once voracious appetite for commodities has weakened with its slowing economy, declined by 10 percent to $3.1 billion in the first half of 2015, according to an analysis of Census Bureau trade data by the Institute of Scrap Recycling Industries Inc. (ISRI). Export sales to China totaled $3.5 billion in the same period a year ago and $5.5 billion in the first half of 2011, ISRI researchers wrote in a scrap market report released on Aug. 8.

 “The big question is going to be how long this lasts,” said Scott Horne, general counsel and vice president of government relations for ISRI.

“It’s not going to resolve itself very quickly in China. As a result, a lot of people are looking for alternative markets to develop and to grow.”

Recyclers are also restructuring operations.

“A lot of people have cut back on hours or even laid people off,” Horne said. “That’s something our members hate to do because many of them are small businesses that have been around a long time and have a commitment to their labor force.”

Some businesses are selling their yards to other recyclers because plunging scrap prices have made it difficult for them to survive, particularly if they have not had the benefits of learning tough but important lessons from previous downturns, such as not to retain inventory too long or to over leverage.

“You can’t speculate on inventory. That’s dangerous,” Horne said. “There was a philosophy that you could buy low and wait until you could sell high but that strategy was upended in the downturn in the late ‘80s and early ‘90s because banking had become more difficult and it was a challenge for some to get financing.”

Highly leveraged recyclers eventually could not cover their debt payments during that prolonged downturn. Recyclers that entered the industry during more recent boom times may now be having similar challenges.

“A lot of people bought a lot of equipment when the market was so crazy and those who borrowed heavily to do that have felt some strain,” Horne said.

Scrap processing firm Metalico cited debt relief as a benefit of its recent sale to Total Merchant Ltd. for $102 million. Its “strengthened balance sheet will reinvigorate Metalico as a prominent force in its markets and potential acquirer of other scrap operations,” the New Jersey-based operator of scrap metal recycling facilities stated in a press release on Sept. 11.

Savvy recyclers can capitalize on the downturn, like by repairing or replacing equipment that they may not have properly maintained when they were running hard during market peaks.

“If people have socked away some money over the years, then this is a great time to be looking at becoming more efficient,” Horne said. “Anyone buying equipment right now is probably getting a deal.”

Slower markets are also ideal for investing in training and developing talent, Horne said. However, recyclers may be reluctant to spend until conditions improve.

“One can recommend but it’s up to the individual to have a good idea of their staying power and if they can take advantage,” Horne said.

Economists do not expect significant price increases soon, but Horne for one is confident that recovery is inevitable.

“It always seems to come back. If it didn’t come back we would be in a real global mess.  It wouldn’t just be us,” Horne said.

"This is clearly a global marketplace. We're not the only ones suffering."


Texas Scrap Metal Laws Changing

Texas metal recycling entitites (MREs) will soon have to start issuing transaction cards to pay customers by cash or debit card.

As of Sept. 1, 2015, Texas scrap yards must comply with the provisions of HB 2187, including the requirement that MREs issue cash transaction cards to their customers.

"Unless a seller had been issued a cash transaction card, a recycler is only able to pay for a purchase of regulated material by check, money order or electronic funds transfer," according to the Texas Department of Public Safety. Cards are non-transferable and MREs must keep copies of each application and a copy of each cash transaction card for two years.

DPS has developed the Application for Cash Transaction Card for use by MREs. It has also drafted proposed administrative rules and amendments, with the advice of the Texas Metals Advisory Committee.

Law changes that impact Metal Recycling Entities under Texas HB 2187 and the proposed administrative rules and amendments include the following:

  • Your records must include the amount of the purchase but you do not have to report it to the state.
  • You must keep a copy of: 
    • a) the seller's cash transaction card or approved application for a cash transaction card if you paid in cash; 
    • b) the debit card receipt and the seller's cash transaction card or approved application for a cash transaction card if you paid by debit card; or 
    • c) the check if you paid by check.
  • You can only pay in cash or by debit card if the seller has a valid cash transaction card issued by you or another metal recycling entity.
  • An application for a cash transaction card must include:
    • the applicant's name, address, sex and birth date; 
    • the identification number from their personal identification document;
    • a digital photograph of the applicant at the time of their application;
    • a clear and legible thumbprint of the applicant; and
    • the applicant's signature.
  • A cash transaction card must include:
    • the seller's name and address;
    • a digital photograph of the seller;
    • an identifying number that is unique to the individual card;
    • the card's expiration date, which may not be later than two years from when the card was issued or renewed; and
    • the name of the metal recycling entity issuing the card and their state issued registration number.
  • A cash transaction card must be laminated or made of a rigid plastic or other durable material that will preserve the legibility of the information contained on the card.
  • All information on a cash transaction card must be legible and in English. 

Watch these videos to see how ScrapyardPro can help you comply with Texas recycling laws:

Texas Cash Cards for Scrapyards

Texas Recycling Laws for State Reports

Or call us at (800) 405-3959 to learn how you can save time preparing Texas scrap cards and reporting purchases to the state.


Set Positive Goals for Safety Programs

Focus on your efforts. Not the results.

That’s the essence of the Occupational Safety and Health Administration’s policy for a Voluntary Protection Program (VPP), under which employers, employees and OSHA collaborate to make a workplace safer.

So, while the beginning of the year is a good time to set safety goals for your scrapyard, do so with caution. Set safety goals based on how to work safer, rather than rewarding employees for not reporting injuries. Otherwise, OSHA may require you to revise your VPP.

In a December newsletter regarding scrapyard safety, the Institute of Scrap Recycling Industries provides potential safety goals that can make your scrapyard safer without running afoul of OSHA’s policies for safety programs.

“We’re trying to get in front of the injuries and to reward them for the things that lead to safety,” said Joe Bateman, a safety outreach manager for ISRI.

Though rewarding employees with gift cards for an injury-free month may sound like a good idea, your money would be better spent rewarding them for such positive habits as wearing personal protective equipment and attending safety training.

In an August 2014 memo, OSHA stated:

“A positive incentive program encourages or rewards workers for reporting injuries, illnesses, near-misses, or hazards; and/or recognizes, rewards, and thereby encourages worker involvement in the safety and health management system.”

Furthermore, it continues:

“When an incentive program discourages worker reporting or, in particularly extreme cases, disciplines workers for reporting injuries or hazards, problems remain concealed, investigations do not take place, nothing is learned or corrected, and workers remain exposed to harm.” 

Though OSHA has been pushing businesses to shift to positive incentive programs for several years now, some scrapyards still haven’t replaced VPP that focused on injuries, often because of a lack of knowledge or resources for doing so.

“When you have a workforce of 35 people you’re not going to hire a full-time safety manager. It falls on you,” Bateman said.

But ISRI is helping to make the industry safer by providing free safety training and education to its members. Learn more about ISRI’s safety outreach program and resources at


Sluggish Economies Abroad Pressure U.S. Scrap Prices

Declining metals prices are pinching profitability for scrapyards.

Scrap consumers are paying them less but yards are forced to pay their customers more to get them to sell in a deflated market.

“When prices tend to come off there’s less incentive for people to bring materials into the yards because they’ll get less money for it,” said Joe Pickard, economist for the Institute of Scrap Recycling Industries (ISRI).

Metal prices have dropped as overseas demand has softened due to slower economic growth abroad. Export prices have also declined as the U.S. dollar has strengthened in comparison to foreign currencies.

As of Sept. 30, U.S. exports of all scrap commodities had decreased 12 percent year-over-year while the dollar value of imports had increased by 5 percent, according to the Nov. 7 issue of ISRI’s Friday Report, a weekly compilation of economic, commodity and scrap market highlights for the trade group’s members.

“Because there’s more capacity to process materials, people have to bid more to get materials to feed the shredders,” Pickard said. “When the prices you pay rise and the prices you get for selling are softer that cuts into your profitability.”

Processors have added and upgraded shredders in recent years to cut their processing costs. “It’s a race to the bottom of the cost curve,” Pickard said.

With a net gain of 12 installations, the North American shredder market expanded by 4 percent in the past three years, bringing the total to 365 shredders, according to an article in the Sept./Oct. issue of Scrap magazine, an ISRI publication.

Scrap Publisher Kent Kiser wrote in a blog post on ISRI’s website:

Changes in the number, size, type, and geographic location of shredders not only indicate trends in the shredding niche but also can suggest the overall health of the scrap industry. From roughly 2001 to 2010, for example, growth in the installation of large shredders was a sign that processors wanted to shred more scrap that previously was sheared and boost their throughput tonnage to meet higher demand for low-residual frag. In more recent years, the large-shredder trend has slowed, and smaller shredders have gained popularity by allowing operators with modest input tonnage—and more limited financial resources—to enter the shredding fray.” 

Consumption should increase as economies strengthen in the U.S and abroad. “It’s much more of a global marketplace for scrap today,” Pickard said.

Though U.S. policy makers are scaling back monetary stimulus, foreign counterparts like the Bank of Japan and European Central Bank are dialing it up as they seek to jumpstart their economies. Pickard said, “We’re still not firing on all cylinders but compared to other economies we’re doing pretty well.”

Click here to learn how you can use Scrapyard Pro’s customer retention and rewards programs to keep your business growing even in down times.


Tips to Prevent Metals Theft

Metals theft poses a danger to communities across the country. In recognition of this year’s National Crime Prevention Month (October), Scrapyard Pro offers the following tips for preventing metals theft:

  • To prevent the removal and stripping of air conditioning units of their metal coils, property owners may enclose their unit in a wire cage affixed to the mounting pad.
  • Property owners can also prevent the theft of AC units by padlocking their power disconnect box with a quality disc type padlock. This type of lock makes it difficult, if not impossible to cut the lock quickly with bolt cutters. Home improvement stores offer many brands of these locks for under $20.
  • A commercially available alarm product that monitors refrigerant pressure, line and load voltage is also available to address the theft of AC units.
  • To prevent theft of plumbing pipes and wiring, ensure that all crawl space openings are secured with tamper resistant screws.
  • To protect vacant houses, keep the electric current on, leave certain lights on and make law enforcement officials aware of the building’s status.
  • Locations that have metals stored outside in or out of fenced lots should move the items to storage inside a secured structure.
  • Local law enforcement may assist in patterned attacks through placement of mobile hidden surveillance cameras when analysis of data indicates a likely crime, and permission of property owners is obtained. Even inexpensive trail cams may be used for this purpose if cost is an issue.
  • A new technology that is being employed to allow for identification of stolen wiring is the application of specific identifying markings on wiring insulation, laser etched wiring, and markings of other kinds. Identification is essential in building stronger cases and prosecution.
  • Metals theft is not a victimless crime. It has caused property damage, injury, and even death. Recyclers work closely with law enforcement to prevent this serious crime and to catch thieves.

Scrapyard Pro is a member of the Institute of Scrap Recycling Industries (ISRI), the Voice of the Recycling Industry™. ISRI developed and operates, a free web-based alert system that connects law enforcement communities and scrap yard operators in the investigation and prevention of materials theft.

Law enforcement officials can post information about stolen scrap materials or materials that have been stolen by thieves that could be sold for scrap. The reports are turned into alerts that are then broadcast over the Internet to all member scrap yards within a 200 mile radius. has contributed to the recovery of $1.6 million of property by distributing 15,456 alerts among 18,361 active users since 2009.

ISRI also offers law enforcement training involving education on recycling facility operations, state laws, and metals theft identification. Go to for additional information from ISRI, including tools for law enforcement, prosecutors and state legislators.


ISRI Devotes Day to Safety

The Institute of Scrap Recycling Industries (ISRI) is urging its members to take a time-out for safety today, following at least 11 workplace deaths and multiple critical injuries since early August.

ISRI has declared Oct. 15 to be Safety Stand-Down Day, encouraging members to stop operating for at least one hour on every shift to engage in safety awareness training. Members can find safety tips, training outlines, inspection checklists, videos and other resources at the ISRI Safety website.

In an Oct. 8 letter to members announcing the safety day, ISRI leaders wrote:

“These tragedies at our member facilities have not only changed the affected families, friends and coworkers forever, but also the company’s owners’ lives and their families’ as well. It is sad and this trend must stop. Please take this opportunity to observe Safety Stand-down Day to seek out and eliminate hazards within your operations. Demonstrate to your workforce that safety is your number one core value and that you consider them to be the most important asset of your operation. Remember, Safely or Not at All.”

ISRI’s Safety Outreach Services provides hands-on assistance free of charge to members as well. Members and non-members can also subscribe to ISRI’s Safety Update newsletter.

Click here to tell us how you emphasize safety at your recycling center, and we will share your story with our readers.



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Our Story

We started 20 years ago as Web4Minds, a software development firm that provides custom solutions to meet our clients’ needs. One such client came to us four years ago to develop software to manage their scrapyards.

Upon receiving feedback from the client and working with dozens of others, we realized that we had created a product that stood out among the competition, so we brought our solution to the marketplace as Scrapyard Pro. It is now used at recycling centers across the country, by clients ranging from single-location owners to regional operators.