Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets:...
Transcript of Recycling Economics and Markets: Scrap Recycling Industry … · Recycling Economics and Markets:...
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
Overview
• The Globalized Scrap Marketplace • Domestic Industry Ups and Downs
• Challenges and Opportunities Going Forward
• About the Institute of Scrap Recycling Industries, Inc. (ISRI)
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
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%).
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
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.
Per Capita GDP in China, Developing Asia and Developed Economies
Domestic Industry Response: Capacity Expansion
And then this happened…
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
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.
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:
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.
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
Expanding Range of Products: Electronics
Sources: U.S. Interna3onal Trade Commission, ISRI
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.
About ISRI
1,700 Member companies
34 Countries
7,000+ Recycling facilities worldwide
Institute of Scrap Recycling Industries, Inc.
Ferrous & non-ferrous metals
Paper Plastics
Glass Rubber Textiles" Electronics
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
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