News that China would ban certain scrap imports shook the recycling industry last summer, yet U.S. global scrap exports increased overall in 2017 according to a new analysis from the Institute of Scrap Recycling Industries (ISRI). As improved demand for ferrous and nonferrous metal scrap more than offset weaker demand for non-metallic scrap, total U.S. scrap exports advanced in 2017 in both value and volume terms.
“Despite adversity in 2017, the recycling industry proved to be very resilient as it has shown to be so many times in the past,” said ISRI Chief Economist Joe Pickard. “Scrap is a valuable commodity used as feedstock in the manufacturing process in countries around the world. Its constant demand demonstrates the longstanding value and need in the global marketplace. However, while overall exports fared better in 2017 and provide some ground for optimism, one need look no further than the plastics data to see the potential impacts of China’s import ban on other scrap commodities.”
According to recently released Census Bureau data, U.S. exports of all scrap commodities rose to 37.9 million tons valued at $17.9 billion last year, an 8.6% increase in dollar terms. China once again played an important role in U.S. scrap exports. An estimated 31% of U.S. exports, valued at more than $5.6 billion were destined for mainland China in 2017.
“China’s ban and change in regulations will continue to redirect global scrap flows,” Pickard stated. “The implementation of reduced ‘carried waste’ thresholds starting March 1 remains squarely in focus for scrap recyclers despite numerous unanswered questions. Among those questions are: what exactly constitutes carried waste; whether one percent for nonferrous scrap and 0.5% threshold for all other scrap materials can be effectively (and consistently) implemented; and whether import license cuts will be geared mainly toward mixed metal shipments or for all nonferrous scrap commodities. Furthermore, the difference between scrap and waste remains a critical distinction in policy discussions moving forward.”
Commodity by Commodity Analysis:
Nonferrous: Although U.S. copper and copper alloy scrap exports to mainland China did trail off in the 4th quarter of 2017 (down 10 percent year-on-year), for 2017 as a whole shipments to China increased nearly 4 percent. Overseas demand also improved in Hong Kong, Korea, Japan, Malaysia, Canada, and Mexico last year, helping to boost U.S. copper scrap exports 6.2% in 2017 and above the 1 million ton mark for the first time since 2014 according to the latest Census Bureau trade data.
Unlike the slowdown in 4th quarter copper scrap exports to mainland China, U.S. exports of aluminum scrap to China surged 32 percent higher year-on-year (as compared to the 4th quarter of 2016) to more than 230,000 metric tons during Oct-Dec 2017. As a result, aluminum scrap shipments to China jumped 18.5% higher for 2017 overall, helping to lift total U.S. aluminum scrap exports (including UBC’s and RSI) 15.8% higher to nearly 1.57 million metric tons. Other growth markets for aluminum scrap last year included Korea, Mexico, India, Hong Kong, Indonesia, and Germany according to the Census data.
Ferrous: U.S. ferrous scrap exports (excluding stainless steel and alloy steel scrap) had their best annual performance since 2014, climbing 23% higher year-on-year by volume to 13.8 million metric tons valued at over $4.1 billion in 2017. Improved demand from Turkey (+16%), Vietnam (+93%), China (+60%), Pakistan (+65%), Bangladesh (+111%), Mexico (+12%), and others contributed to last year’s gains.
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