Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets:...

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Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director of Commodities Institute of Scrap Recycling Industries, Inc. Carolina Recycling Association 2014 Annual Conference April 1, 2014 Asheville, North Carolina

Transcript of Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets:...

Page 1: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook

Joe Pickard

Chief Economist and Director of Commodities Institute of Scrap Recycling Industries, Inc.

Carolina Recycling Association 2014 Annual Conference

April 1, 2014 Asheville, North Carolina

Page 2: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Overview

•  The Globalized Scrap Marketplace •  Domestic Industry Ups and Downs

•  Challenges and Opportunities Going Forward

•  About the Institute of Scrap Recycling Industries, Inc. (ISRI)

Page 3: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

U.S. Scrap Exports to China and Rest of World, 2013 vs. 2003, FAS Value (Dollars)

Sources:  U.S.  Census  Bureau/U.S.  Interna3onal  Trade  Commission

Page 4: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Globalized Marketplace: Ferrous Example

The latest trade figures from the Commerce Dept. show U.S. ferrous scrap exports declined 14% by volume and more than 20% by value in 2013 due to weaker demand in India (-60%), Turkey (-18%), Taiwan (-15%), Korea (-11%) and China (-1%).

Page 5: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Global Scrap Exports from All Countries, 2011 Source: UN Comtrade Database

Commodity   Volume  (mt)   Value  ($)  Aluminum  scrap   7.5  million   $13.2  billion  Copper  scrap   5.6  million   $25.5  billion  Ferrous  scrap   106.7  million   $53.9  billion  Glass   3.2  million   $386  million  Lead  scrap   272,000   $417  million  Nickel  scrap   131,000   $751  million  Plastic  scrap   15  million   $6.9  billion  Precious  metal  scrap   122,000   $28  billion  Recovered  paper   59  million   $12.1  billion  Rubber  scrap   1  million   $514  million  Textiles   911,000   $496  million  Tin  scrap   151,000   $251  million  Zinc  scrap   373,000   $644  million  Other  base  metal  scrap   440,000   $2.1  billion        TOTALS   200.6  million   $145.2  billion    

Page 6: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

China Plays A Key and Uncertain Role

- China has clearly been a key driver in global commodity demand growth.

-  China seeking to balance economic growth with environmental concerns.

-  Recent efforts to re-enforce quality requirements on scrap imports.

-  Slower apparent growth also has important implications for scrap demand.

-  Chinese demand sensitive to relative primary and secondary prices.

-  Questions of self-sufficiency in scrap generation.

-  China still playing critical role across commodity markets.

Page 7: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Per Capita GDP in China, Developing Asia and Developed Economies

Page 8: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Domestic Industry Response: Capacity Expansion

Page 9: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

And then this happened…

Page 10: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Post-Recession Market Challenges

From the scrap recycling industry perspective, a number of issues have made for more challenging market conditions recently, including: •  Heightened competition for available feedstock domestically

•  Margin compression

•  Uneven manufacturing growth

•  Competition from scrap substitutes

•  Strong dollar and commodity price volatility

•  Volatile overseas demand and shipping costs

•  Excess global capacity, especially in China

•  New and potential regulatory changes and trade restrictions

Page 11: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Post-Recession Divergence and Need for Re-Balancing

•  Headline economic figures are signaling economic growth is accelerating, businesses continue to add jobs to their payrolls and industrial production seems to be back on track.

•  But broadly improving economic conditions have not necessarily translated into more favorable scrap and commodity market conditions.

•  The nation’s economic performance has varied significantly across the various sectors of the economy, regions of the country and segments of the labor market.

Page 12: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Manufacturing Closely Tied to Scrap Recycling, and the Mfg. Recovery Has Varied by Region

Real Change in U.S. Manufacturing Output by Region, 2007 - 2012:

Page 13: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Global Rebalancing Also Underway

Key (Re)Balancing Acts in 2014 •  The Federal Reserve’s efforts to scale back stimulus efforts without

scaring investors and choking off growth.

•  China’s efforts to maintain relatively rapid growth while improving environmental protection.

•  The need to support growth along the European periphery without damaging the cohesion of the European Union

•  Potential global shifts in manufacturing output, consumption and trade flows between developing and developed economies.

Page 14: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

But Scrap Processors are Innovative and Resilient…

Key Features in the Evolution of the U.S. Scrap Industry •  Increasingly Capital Intensive

•  Industry Integration & Consolidation •  Heightened Competition

•  Regulatory Challenges

•  Containerization & Globalized

Marketplace

•  Expanding Range of Commercially

Recyclable Commodities

Page 15: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Expanding Range of Products: Electronics

Sources:  U.S.  Interna3onal  Trade  Commission,  ISRI

Page 16: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Other Important Trends and Opportunities

•  Potential for continued industry consolidation, including vertical

integration, e.g. car dismantlers.

•  Rising quality demands at home and abroad.

•  Greater focus on recycling “higher hanging fruit” via improved technology,

waste stream audits and better consumer access to recycling. •  Continued emphasis on certifications and raising industry professionalism.

•  Efforts to raise recycling rates.

•  Global marketplace, but challenges to free trade and need to develop new

markets.

•  Confluence of demographic, climate, sustainable development, market and

technological changes that should place greater emphasison the benefits of

recycling that should bode well for the health of the industry.

Page 17: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

About ISRI

1,700 Member companies

34 Countries

7,000+ Recycling facilities worldwide

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Institute of Scrap Recycling Industries, Inc.

Ferrous & non-ferrous metals

Paper Plastics

Glass Rubber Textiles" Electronics

Page 19: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Industry Snapshot: $90 Billion Industry in U.S.

2013 U.S. Scrap Exports

42.8 $24B 160 Total exported (million metric tons)

Value of materials exported

Number of destinations exported to

135,000,000 Tons processed annually

Page 20: Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets: Scrap Recycling Industry Trends and Outlook Joe Pickard Chief Economist and Director

Contact Information:

Joseph C. Pickard Chief Economist and Director of Commodities

Institute of Scrap Recycling Industries, Inc. Telephone: 202 662-8542

E-mail: [email protected]

Thank you