Soaring freight rates have gained attention, but the value of ferrous scrap has helped cover the cost for traders of that material.

Global inflationary pressures are in place, said panelists at a ferrous scrap roundtable session at the late June International Recycling Week online event. However, while freight rates and costs of capital have increased, the soaring price of ferrous scrap has made the pain less noticeable.

The global steel industry has bounced back from a cooling-off period in the spring of 2020, two traders on the panel said. “The demand for scrap has kept up far better than the rate at which it was generated,” Nathan Fruchter of New York-based Idoru Trading & Consulting said. “I think that’s because most steel producers kept on producing during the pandemic.”

“From February to April 2020, we shipped only 20 percent of our volume compared to the year before,” noted Ved Prakash of Belgium-based secondary commodities trading firm Gemini Corp. “After that, trade picked up. From June 2020 until now, the scrap business has been normalized.”

The greater COVID-19-related hiccups occurred on the supply side, the traders said. “Scrap is a product of affluence. If an economy does well, people spend a lot of money, they throw out more, they generate more scrap,” Fruchter said. “During the lockdowns, less scrap was generated by each household and less was collected and less was brought into yards. And there were fewer demolition projects, especially the first few months of this crisis.”

Prakash said, “The total volume of internationally traded scrap has averaged around 100 million tons or so the last 20 years. In 2020, it went down to 85 million tons. It went down because there was a standstill for three or four months around the world.”

As economies around the world have ramped back up and governments have invested in infrastructure, the upward price trajectory of steel and scrap has been steady. Also rising has been the cost of sea freight and the cost of credit.

Prakash said Gemini ships about 130,000 sea containers annually across several commodities, so it analyzes logistics costs thoroughly. Perhaps surprisingly, he said, the global rise in sea freight rates has not imposed an undue burden.

“The logistic cost percentage of [a transaction] price is usually around 20 percent,” Prakash remarked. Despite rising freight rates that have garnered much attention “It is still the same” as of mid-2021, he said, since scrap prices also have moved up. “The total price mechanism is not dramatically different; freight rates have doubled or tripled, but so have scrap prices, so the net impact is zero.”

Risk, as measured by cost of capital, has increased, however, Prakash said. Using India as an example, hesaid the cost of capital is almost $40 to $45 per ton for buyers of imported ferrous scrap. “Today, they are able to absorb it” because of high scrap prices and margins, “but in general, this is a tremendous cost.”

Asked whether the greater risk will lead to more hedging activity in the ferrous market, Fruchter expressed skepticism about the ability of bulk shippers to hedge via current methods and contract offerings. “The words volume and ferrous scrap hedging somehow don’t fit into the same sentence,” he quipped, referring to the 10 metric tons lot size of a current London Metal Exchange (LME) contract. “If you look at the Turkish contract the LME has, it’s a head spinner. How do you hedge a 30,000-ton cargo?”

Joshua Toney, who works from New York for London-based Freight Investor Services, said shippers historically don’t wish to hedge an entire cargo that size. However, he added, “I’ve seen 5,000 tons trade in sequential days in the market. If you hedge half of it, you can get that done in 10 trading sessions” for a commodity with a 30-day price horizon.

Toney added, “We’re seeing steelmakers do it, layering their hedges.” By hedging 1,000 to 4,000 tons per day “they are able to layer in their position on the time period they need to execute that hedge.” Toney urged buyers and sellers of ferrous scrap to consider the technique, adding, “If we all sit around waiting for some big entity to come and [are] waiting for that market, that’s like waiting for pigs to fly.”

Roundtable moderator Sean Davidson of Davis Index, which is headquartered in Singapore, responded that an LME aluminum contract that now has substantial trading volume was underutilized for nine or 10 years before large producer Alcoa began using it. “That’s what it took,” Davidson said.

Panelists also debated the future role of China in the global ferrous scrap market. Prakash said the push for low-carbon steel by China’s government has prompted steelmakers there to use more scrap. But he said the nation has some “410 million tons on the ground” of ferrous scrap or end-of-life steel items. Davidson ventured that improving domestic processing capacity and quality in China “might actually mean they may be able to export rather than import in a couple of years.”

Fruchter saw problems for Chinese buyers on the supply side, particularly if mills there wish to buy bulk cargoes from the United States or Europe based on newly minted Chinese government standards. West Coast U.S. bulk shippers “have been shipping scrap for 50 years to various markets,” said Fruchter. “Do the Chinese buyers want to reinvent the wheel, create a new HMS [heavy melting steel] standard? It’s absurd. To ship a cargo and to face the risk to have to take the ship back if someone decides the quality isn’t good. It’s lunacy, absurdly absurd.”

Despite concerns expressed by Prakash that nations are becoming more protectionist regarding their scrap, global demand seems poised to keep the steel and ferrous scrap sectors active, said the panelists. “I think it’s fair to say the demand for steel across the globe is looking very good for now, so that means the demand for scrap is looking good,” Fruchter said.

Davidson said that while the sizable spread between the price of scrap and hot-rolled coil steel has gained attention, long product (rebar) mills are larger volume buyers. With “rebar stuck at around $900 per ton,” he said, that could keep a ceiling on ferrous scrap prices.

International Recycling Week was organized by United Arab Emirates-based Waste & Recycling Middle East & Africa magazine.

The company completed its first shipment of battery materials through its partnership with Marubeni.

Retriev Technologies, a global leader in battery recycling and management based in Lancaster, Ohio, has announced the completion of its first volume shipment of recovered battery materials to Tokyo-based manufacturer Marubeni Corp. In February 2021, Marubeni Corp. and Retriev Technologies Inc. announced a strategic partnership for developing an innovative business model for end-of-life lithium-ion batteries (EOL LIB).  

According to a news release from Retriev, both companies are working together to take valuable metals recovered from EOL LIB to expand the circular business model for electric vehicle battery-to-battery closed-loop recycling in the battery industry.

“We are very pleased to see this strategic international endeavor now underway and to be involved in the creation of a sustainable circular economy for the reuse of battery raw materials worldwide,” says Retriev Vice President Todd Coy. “We expect positive results out of our collaboration with Marubeni, leaders in trading critical raw materials for the battery industry. We’re confident that our progress will positively impact our ability to secure secondary battery raw materials necessary for a sustainable battery ecosystem. Our initial shipment to Japan this month contained 17 tons of material that will be used to validate cathode production for new batteries.”

Marubeni and Retriev are currently in discussion with cathode producers for secondary battery materials, Retriev says.

The Beast is designed to shred ferrous metals, nonferrous metals, electronic scrap and truck tires.

BCA Industries, a Milwaukee-based manufacturer of recycling equipment and industrial shredders, says it offers shredding technology that can help recyclers shred tough metal to produce chips at high volumes using advances in hydraulic systems.

According to a news release from BCA Industries, traditional large-capacity shredders have points of vulnerability, such as knives, shafts, bearings and hydraulics that are not truly designed for such volumes or loads, which can result in breakdowns and production downtime. Additionally, the process of shredding, screening and grinding metals and materials to size with different equipment in separate operations has been a bottleneck to processing. To ensure high production and reliability, BCA Industries says it developed a high-volume, high-torque shredder to reduce tough metals designed to minimize breakdowns.

The company’s customizable ES2000 shredder, called “The Beast,” is designed for tough applications, such as ferrous metals, nonferrous metals, electronic scrap and truck tires. The shredder comes in stationary and portable units. With 24-inch diameter hard-faced knives using a base AR-500 alloy, 55-inch by 72-inch by 44-inch cutting chambers and 8-inch 4130 Chromoly steel shafts, the unit can reduce very large metal scrap. With 24,000 to 38,000 pounds total gross weight, not including power supply, the shredder is designed to shred 15 to 35 tons of metal or dense materials per hour with 179,000 foot-pounds of torque per knife. When more throughput is required, it can be rated up to 800 horsepower and use dual cutting chambers. To maximize high-torque throughput and efficiency, it uses a pressure compensated variable displacement pump that allows the rpm to increase and decrease based on load.

According to BCA Industries, the unit’s design addresses the vulnerabilities of conventional shredders by using an inexpensive cluster drive system of eight small hydraulic motors that create redundancy in the power supply, which eliminates much of the possible downtime. These cluster drive motors are off-the-shelf and readily accessible, and BCA Industries reports that they minimize cost while increasing reliability.

Instead of 7-inch shafts, the 8-inch Chromoly shafts increase usable life, BCA Industries reports. In place of old HEX shaft design or a double key round shaft, the unit uses a six-key design where the knife rides on disposable keys not directly on the shaft. With the keys taking abuse instead of the shaft, the design eliminates shaft washout and simplifies knife changes.

According to BCA Industries, this shredder is designed with a double labyrinth style drop zone and outboard bearings, which eliminates any direct path to the shaft bearings. It also allows compressed material a path to exit the shredder.

Chura slated to be on the aftermarket sales team.

Davis-Standard, out of Pawcatuck, Connecticut, has announced that James “Jim” Chura has been hired as an aftermarket sales engineer to support Davis-Standard’s converting customers in the Southeast U.S. and Mexico. He will be responsible for driving aftermarket sales, addressing technical aspects of customer inquiries and quotations and providing after-sale assistance to customers. 

Chura brings 14 years of industry knowledge to his new role, having held various sales and management positions, most recently as a regional sales account manager for ABB of Raleigh, North Carolina. This includes experience supporting customers in the paper, converting and packaging markets.

“Jim understands the converting industry and the needs of our customers in the Southeast U.S.,” Andrew Alaya, Davis-Standard vice president of aftermarket sales, says. “He has an excellent understanding of customer needs and available converting technologies and upgrades. This aligns well with our goal of using aftermarket services to help our customers get the most from their equipment investment while improving profitability and product quality.”     

Chura is a member of TAPPI (the Technical Association for the Pulp, Paper and Converting Industry) and is TAPPISAFE certified. He is a graduate of the University of Missouri, Columbia.

Chura can be reached at jchura@davis-standard.com.

The Boston-based secure destruction business will use proceeds from this sale to reinvest in other growth areas of its business.

Iron Mountain, a storage and information management services company based in Boston, has announced that it has sold a portfolio of five facilities to London-based Intermediate Capital Group (ICG), generating gross proceeds of about $178 million based on current exchange rates. The transaction, totaling 550,000 square feet, is a sale-leaseback transaction with the properties located in the greater London area. Iron Mountain will remain in these facilities under an initial 12-year lease term, with options to renew up to an additional 20 years.

According to a news release from Iron Mountain, this transaction is part of the company’s ongoing capital recycling program. Iron Mountain says it expects to use the proceeds from this sale to reinvest in higher growth areas of its business.

“With our strong development pipeline together with highly attractive market valuations for industrial assets, we are pleased to continue our capital recycling program,” says Barry Hytinen, executive vice president and chief financial officer at Iron Mountain. “The sale-leaseback of these assets allows us to generate significant investable proceeds while essentially maintaining long-term control of the facilities. On a leverage neutral basis, we estimate this transaction will generate nearly $140 million of capital, which we intend to invest in higher growth areas, including our data center business.”

Chris Brown, director at ICG, adds, “The Iron Mountain portfolio is a prime example of the mission critical real estate that ICG’s Sale and Leaseback fund is seeking to invest in. This represents the fund’s third transaction in 2021 and second transaction in the U.K., following the 2.94-million-square-foot forward funding of Jaguar Land Rovers’ new facility at Mercia Park earlier this year.”

ICG was advised by its asset management partner Marchmont Investment Management and CBRE, and Iron Mountain was advised by JLL.