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 charge.
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 metals.
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 crew.
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 noted.
"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.