Don’t Just Scrap It
What do you think of when you hear the word “scrap?”
Throw away those scraps of paper. Feed those scraps to the dogs. I can’t use this; just scrap it.
But when we talk about “scrap metal” the word takes on a whole different meaning.
Scrap metal literally is what’s left over. Old cars and appliances. Building materials from a construction site or a demolition site. Cast Iron.
But don’t throw this kind of scrap away, send it to a junkyard, or leave it lying around your business or home. It’s valuable.
For thousands of year, people have understood the benefits of scrap metals, turning their existing materials into new goods.
Have you ever wondered why the outside of Rome’s Colosseum looks like it’s covered with holes? The original construction of the Colosseum used iron clamps to hold the stones together. After the Fall of Rome, the metal became extremely valuable and people swiped it for their own purposes – using it in other structures or making weapons.
And, here in the U.S. during World War II, scrap drives were a popular way for everyone to contribute to the war effort. People collected unused or unwanted metal that could be used in building equipment to fight the war – and the drives also built morale.
WHY RECYCLE METAL
Like glass (M-PASS November, 2017), metal is a natural element, mined from the earth. Over time the excavated land is depleted and the miners move to other areas looking for metals, taking a huge toll on the land.
Like other types of recycling, reusing metals affects our environment in a number of ways:
- preserving natural resources
- reducing emissions
- and managing energy consumption
Recycling metal can also bring great economic benefits. Scrap metal recycling today is the basis for a powerful industry because it many metals can be recycled an infinite number of times with no degradation of its properties. And it’s an industry that provides jobs.
According to the Institute of Scrap Recycling Industries, Inc. (ISRI), “The scrap recycling industry connects the ends of the manufacturing supply chain. It has evolved in response to changing market dynamics and represents a key component in creating a circular economy.” ISRI’s 2018 Recycling Industry Yearbook follows that statement with this chart:
2017 Volume of Scrap Material Processed in the United States (metric tons)
|Iron and Steel||66,000,000|
|Electronics||5 million + (est)|
|Tires (# of tires)||110,000,000 (2016)|
ALL SCRAP IS NOT EQUAL
To gain the optimum environmental and economic benefits of recycling scrap, you need to know your metals. In case we’ve all forgotten our geology, metals are classified as ferrous or non-ferrous; both types have been used by humans since ancient times. And if you’re not sure which you have, a good old-timey magnet will identify the ferrous materials.
Ferrous metals are combinations of iron with carbon. Some common ferrous metals include carbon steel, alloy steel, wrought iron, and cast iron.
Non-ferrous metals include aluminum, copper, lead, zinc, and tin. Precious metals are non-ferrous. The most common precious metals include gold, platinum, silver, and palladium.
In “The Basics of Recycling Scrap Metal for Money,” Earth 911 ranks the value of the materials:
Stainless Steel $$
Copper has always been valuable and was the first metal to be forged or melted into jewelry and other decorative objects. Copper’s value today is due to its importance in many products that affect our daily lives, such as power cables and plumbing tubes.
And on the lower end, although scrap aluminum isn’t worth a lot of money, it can be recycled and used again within a few months. The recycling process saves 80% of the energy that was used to make it.
ECONOMICS OF SCRAP METAL
Scrap prices are subject to many of the same market forces as primary commodities and can experience similar price volatility. The main factors determining scrap price are international and domestic markets and supply and demand.
Copper continues to have the highest value, as evidenced in the increasing number of copper thefts over the last few years. For example, in an October 2012 article, the Atlanta Journal Constitution reported “Arrests made in copper wire theft ring,” when six people were arrested for stealing wire hanging from AT&T telephone poles and selling it directly to metal recyclers. More recently – in December of last year – street lights went out at an intersection in Kansas City, Missouri, because thieves had stolen the copper wiring from the lights.
The scrap market has become increasingly globalized, partly as a function of better transportation and technological systems, as well as a greater recognition world-wide of the benefits of using scrap commodities due to limited natural resources. As it has become more global, it has made positive contribution to the U.S. balance of trade, with major exports to China, Canada, Mexico, and Turkey, among other countries.
China remains a huge influencer in scrap market prices, as it has in many parts of our business over the last few years. Added to existing U.S.-China trade tension, it’s been difficult to predict how the market will perform this year.
Robin Wiener, ISRI President summed it up this way in an interview with Recycling Today late last year: “China has been the major source of overseas demand for U.S. nonferrous scrap. As a result, China’s import restrictions are having outsized impacts on a range of nonferrous scrap commodities. For example, U.S. exports of copper and copper alloy scrap to mainland China during January to July 2018 were down 41 percent as compared to the first seven months of 2017. The corresponding figure for aluminum scrap is a 26 percent decrease.”
Even with these variables, analysts are predicting a growth in the global scrap metal recycling market. ResearchandMarkets.com released the “Global Scrap Metal Recycling Market 2018-2022” report in late 2018. Their findings predict that the global scrap metal recycling market will grow at a compound annual growth rate (CAGR) of 3.16% from 2018-2022.
The report continues: “… one of the major drivers for this market is the rise in role of metal recycling in key industries. Recycling has witnessed increased importance in key industries such as healthcare and automotive.” But it also cautions: “The uncertainly in trade of steel and aluminum among the leading countries will affect the global scrap metal recycling market during our forecast period.”
Global Market Insights analysts expect that continuing strong consumer demand and intense production in the sector will continue, powered by the increasing use of scrap metals for economic viability and energy conservation.
Copper continues to hold its value and even with China’s import restrictions, the outlook for copper demand is bright for 2019, as demand is expected to outpace supply.
On the other hand, the aluminum scrap market is not as optimistic. Due in part to oversupply, while aluminum scrap is moving, it is not moving at a rate or price that most scrap dealers find satisfactory. The imbalance between supply and demand has pulled pricing lower, and spreads have widened.
In case this hasn’t already caused your head to spin, these two headlines about the ferrous market from different issues of Recycling Today define the meaning of the word “volatility”:
January 11, 2019: “Ferrous scrap loses value in January trading”
March 21, 2019: “RMDAS (Raw Material Data Aggregation) prices show ferrous
market rebound Mill buying price transactions show $20 per ton gains for nearly
all grades in all regions.”
YOU DON’T HAVE TO FIGURE THIS OUT ON YOUR OWN
Fortunately, there are resources that can guide us through what may seem like a complicated process.
The ISRI issues a Weekly Market Report which tracks prices and other commodity news.
And, of course, there’s an app for that: the iScrap App allows you to keep up with prices and other industry news on your phone.
Or we can help. If you don’t have a magnet handy to determine if you scrap metal is ferrous or non-ferrous, or if you want to simplify the whole process, M-PASS Environmental can help you sort it out. M-PASS’s Lorraine White: “We manage a large volume of scrap metal across the United States and are able to leverage outstanding scrap metal pricing for our clients. We understand the scrap metal industry and therefore, provide above average rebate programs to our customers.”
For more information:
ISRI Industry Recycling Yearbook 2018
This annual publication by ISRI, “the voice of the recycling industry,” provides an in-depth look at all areas of scrap recycling.
Recycling International “Scrap News”
“Unveiling recycled metal industry trends with respect to the metal landscape: escalating demand for scrap metal processing to augment the industry expansion over 2018-2024”
December 2018 report from Global Market Insights