Any attempts to assess the future success of shredders
begins with a look at demand. A cursory glance at changes over
the past decade suggests that the future could be rosy.
Overall demand for shredded scrap has increased by about 50
percent since 2001, making the fragmented material the most
popular grade in the ferrous scrap market, according to U.S.
Commerce Department figures. The growth was fueled by export
demand, the operational capacities of mini-mills and
breakthroughs in shredder technology.
Ten years ago, shredded scrap accounted for about 24 percent
of all sales; today, that figure has grown to 30 percent. A
decade ago, shredded accounted for 33 percent of all export
sales; in 2011, it has been hovering near 40 percent. And in
2001, shredded scrap grabbed about 21 percent of all domestic
scrap sales; that figure now stands at around 26 percent.
In raw numbers, an additional 6 million tons of U.S.
shredded scrap was sold to domestic and foreign buyers in 2010
compared with a decade ago.
But just as in real estate, the success or failure of a
shredder operation depends on location, location, location. In
regions overserved by shredders, the competition could drive up
supply and drive down potential profits. But in areas
underserved, adding a shredding operation right now could
improve market share and opportunities.
Meanwhile, producers, processors and providers of scrap also
have a dog in the fight over whether steel or aluminum is the
material of choice for lightweighting vehicles.
The steel and aluminum industries continue to debate the
transition to lightweight metals, with the focus drawn toward
fuel efficiency standards for cars, which the federal
Environmental Protection Agency would like to average as much
as 62 miles per gallon (mpg) by 2025.
Movement to lightweighting will certainly have an impact on
the scrap supply chain. One of the keys to lightweighting lies
in mass reduction, which the steel industry has been working to
achieve for years, according to the Steel Market Development
Institute, a division of the American Iron and Steel Institute.
Gains in the use of advanced high-strength steels continue to
aid lightweighting efforts and improve fuel efficiency.
On the other side of the issue, aluminum advocates say the
best way to reduce vehicle weight, and thus reduce emissions,
is with the use of lighter-weight material, principally
aluminum in place of steel where possible.