Shredded scrap has become the commodity of choice
for all steelmakers, not just those operating electric-arc
furnaces, as scrap appetites grow.
Part of the reason can be attributed to the big
megashredders that have been installed throughout the country
in recent years, changing the mix of scrap grades that aren't
available to mills, one mill buyer said. The machines can shred
heavier grades of scrap, material that in the past was sold as
No. 1 or No. 2 heavy melting steel. Now, much of that scrap
goes to shredders, he said.
"No. 2 heavy melt was once a regular commodity (in
the ferrous scrap market), but now much of that is shredded and
what you see the mills buying is a mix of No. 1 and No. 2 heavy
melt," one western Pennsylvania broker said.
Shredded scrap holds a special appeal to EF melt
shops because it fills the voids in the furnace if they're
using plate and structural scrap. They get the heavy density
and can keep the loading down to a one- or two-bucket
Shredding equipment today is much better than older
models, and prices for nonferrous are high enough to encourage
shredder operators to recover ever-increasing amounts of the
Even integrated mills are using more shredded. Ten
years ago, integrated mills used 85- to 90-percent bundles-both
No. 1 dealer bundles and industrial bundles-as the scrap
portion of their basic oxygen furnace (BOF) charge, one broker
said. Today, many are using more of the secondary grades, like
shredded and plate and structural scrap.
The cleanliness of the shredded scrap produced
these days vs. the product of 10 or 20 years ago is one reason
for the switch, but BOF shops also realize that they have a
strong dilution factor that allows them to use more shredded.
Since 80 to 85 percent of the charge is hot metal from their
own blast furnaces, they can get away with using more secondary
grades of scrap. All shredders now operate with some type of
computer melt programs that show the price of shredded when it
is more competitive with other grades of ferrous scrap and can
provide better yields.
But there are still some concerns among steel mill
buyers. One involves cutbacks in manpower at the big scrapyards
operating the shredders. One Midwest mill buyer said he
believes many of those laid off in the current economic
recession are the pickers that work the conveyor belts and
remove the "meatballs," or pieces of shredded scrap that
contain copper or other metal attachments. But the major scrap
processors say that's not true.
"For us, that is not the case," said Rob Bakotich,
vice president of sales and marketing at Detroit-based Ferrous
Processing & Trading Co. "As far as crews on the picking
lines, we are not cutting back the number of pickers."
Another shredder operator said layoffs have been
across the board, and not just the pickers. If anything, yards
are more likely to idle the machines and either assign that
crew to work elsewhere or lay off everyone, including the crane
operators and other workers that are part of the shredder's
Another fear expressed by one mill buyer is the
likelihood of getting so-called "muni" scrap mixed in with the
shredded. These are the metals recovered magnetically from
municipal recycling facilities either before or after the trash
is burned. That material might contain nonferrous and other
attachments that can not only contaminate a heat but also lower
the furnace's yield.
One mill buyer said he has pre-qualified suppliers
of shredded in order to make sure he doesn't get shredded
that's mixed with muni scrap.
The domestic mills don't have to worry much about
muni scrap, though, said one East Coast trader, noting that
much of that material is sold offshore. Some operators might
run it through a shredder along with junked vehicles, while
others might mix it into the finished product, he said.
Regardless, it's a scrap that domestic steelmakers,
particularly flat-rolled mills, are unwilling to touch, he
"There is no question the material that is exported
is below the level of the shredded consumed by domestic mills,"
said a broker that buys for several U.S. steelmakers. "But that
also is true for other export grades, like heavy melt."
Another issue for shredder operators are the
mercury switches in old vehicles. The mills are pushing for no
mercury in shredded material, and shredder operators are
pushing dismantlers to make sure the switches are taken out
before the junks are flattened.