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ISRI roundtable: 5 things learned in Chicago

Sep 17, 2019 | 02:30 PM | New York | Sean Barry

Tags  ISRI, Commodities Roundtable Forum, aluminium scrap, stainless scrap, nickel, scrap exports, scrap prices

Fastmarkets summarizes five key points we learned at the Institute of Scrap Recycling Industries' (ISRI) 2019 Commodities Roundtable Forum in Chicago from September 11-13.

China possibly set to reclassify scrap grades
Rumors in the non-ferrous scrap market suggest that China is considering reclassifying certain scrap grades, like zorba and clean copper scrap, from waste products to industrial raw materials, which could result in the lifting of recently introduced import restrictions on these grades.

Responding to a question from the audience, Karsten Faak, recycling director at Germany's Trimet Aluminium SE, confirmed that he had also heard the rumors but added that it was hard to obtain any real clarity on the issue from recyclers in China.

“There are rumors in the market that they want to change the policy for next year to get these qualities out of waste and put into a semi-product or a raw material. But when you seriously speak to people they have no idea. When we talk to recyclers who import a lot of stuff they don’t even know what quantities they are allowed to take in for the next month.”

Recyclers in China were only given around three week’s notice before the government rolled out a scrap import quota system in July.
The recent raft of changes to China’s policy on scrap imports comes after the government stated a year ago that it intended to ban imports of all recyclable materials by 2020. 

The decision has heavily impacted US exports of copper and aluminium scrap over the past year and led prices for some grades, such as mixed aluminium clips, to hit decade lows.

Fastmarkets assessed the aluminium scrap mixed clips buying price, delivered to Midwest secondary smelters, at 39-41 cents per lb on September 16, unchanged since August 15 and the lowest level since it was assessed at 38-39 cents per lb on June 2, 2009.

Cleaner zorba adding to flood of twitch
The oversupply of scrap was high on the agenda during the aluminium roundtable since slack export trade has helped push additional tonnes into the market this year.

At the same time, cleaner zorba (minimum 90-97% metallic content) “is becoming a certain twitch” and adding to the abundance of twitch supply, panel member Southern Core Recycling president Becky Proler said during the roundtable.

But there is room for twitch and zorba prices to go lower, market participants said throughout the conference, adding that the market had yet to find a bottom for secondary aluminium scrap prices.

Fastmarkets assessed the aluminium scrap non-ferrous auto shred (90% Al) buying price, delivered to Midwest secondary smelters, at 38-40 cents per lb on September 19, unchanged since September 5 and the lowest level since March 3, 2009, when it reached 38-39 cents per lb.

Malaysia, Indonesia may be new growth markets for exports
As the scrap industry debated the most promising growth markets for scrap originating from the United States, Malaysia and Indonesia, and to some lesser extent India, emerged as front runners.

One US-based exporter of non-ferrous scrap agreed that the Malaysian market was indeed a new focus for his company. “Traditionally, about 70% of our scrap is exported to India,” this exporter told Fastmarkets on the sidelines of the ISRI conference. 

“Now, we are trying to sell more to Malaysia and Indonesia,” he said, thereby reducing India’s share as an end market to about 50%.

But not everybody shared the enthusiasm, citing the lack of a skilled work force and technical know-how in Malaysia and Indonesia.

“They don’t have the infrastructure to process [exported scrap],” one seller source told Fastmarkets.

ISRI announced plans to lead a trade mission to Malaysia and Indonesia in March 2020 for members to explore business development opportunities in these two markets.

Scrap exporters are increasingly looking for new overseas homes for their material following China’s tightening of import standards and the rollout of an import quota system in July. This comes amid an escalating trade war between China and the US.  

Most commentators at the ISRI conference were expecting current trade tensions between the two nations to continue for the foreseeable future, with one noting that it will “get worse before it gets better.” 

Electric vehicles not so green
During the aluminium roundtable, speculation arose about exactly how “green” electric vehicles (EVs) are given that the infrastructure to recycle lithium-ion batteries has not been developed to the same extent as that for recycling lead-acid batteries.

Proler pointed out that lithium batteries, used in EVs, run the risk of catching fire during recycling.

“I am not going to recycle that [type of battery]. It causes fires. I’m sorry,” she said, noting that manufacturers of the batteries had yet to fully assess the environmental impact of safely disposing of these products. 

“Why as a country are we letting manufacturers do things but not have a plan on what they are going to do with the environment afterwards?” Proler asked.

In Germany there was a rush “at any price to be green,” Faak noted. “We [in Germany] are so damn green that we are cutting the tree we are sitting on.”  

Proler also noted that some estimates suggest that the proper infrastructure for EVs in the US won't be ready until 2040, at the earliest.

Despite nickel spike, stainless scrap market mixed
The US stainless steel scrap market remains fairly mixed, although a recent rally in nickel prices helped offset some demand weakness that has partly been driven by a collapse in export trade. 

Nickel prices on the London Metal Exchange have risen by 70% since the start of this year while the rest of the base metals complex has fallen by 5-10%, INTL FCStone base and ferrous analyst Fred Penha said during the nickel/stainless roundtable. 

The nickel LME official cash contract closed at $17,000 per tonne on Tuesday, up by 62.9% from $10,440 per tonne on January 2. The contract hit a nearly five-year high of $18,625 per tonne on September 2.

The rise in nickel follows a decision by the Indonesian government to bring forward a ban on nickel ore exports by three years, with Penha noting that there was no real demand behind the price spike and the rally was unlikely to be sustainable. 

Despite the sharp increase in nickel prices, the ferrous scrap and chrome markets have faced heavy downside pressure and squashed most of the gains recorded in stainless prices at the consumer level.

Fastmarkets assessed the stainless steel scrap 316 solids, clips, broker buying price, delivered to processor Pittsburgh, at 78-80 cents per lb ($1,747-1,792 per gross ton) on September 10, narrowing from 76-81 cents per lb on September 3 but up form 60-65 cents per lb at the start of this year.

At the same time, stainless scrap market participants continue to report flat demand domestically, with exports also falling. 

US stainless steel scrap exports plunged to 230,521 tonnes for January-June 2019, down by 29.6% from 327,480 tonnes in the first six months of last year, according to a slide presented during the ISRI event. Shipments to Canada plummeted by 74.3% to 34,314 tonnes from 133,619 tonnes in the same comparison and those to China tumbled by 97.5% to 1,063 tonnes from 42,262 tonnes. 

Market dynamics have changed over the past couple of decades, Hunter Alloys LLC owner Barry Hunter said during the conference, noting that a viable bulk export market for stainless scrap was essentially killed off after some overseas stainless producers moved their operations to North America. 

Liz Ramanand and Rijuta Dey Bera, both in New York, contributed to this report. 


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