When Christian Rubach, president of the Ferrous Division of the Bureau of International Recycling (BIR) looks at the world now vs. 10 years ago, he sees a number of roads that have led to Asia and to increased secondary commodity utilization.
Speaking to delegates of the 4th China International Metal Recycling Conference, Rubach, also a senior advisor with Germany’s TSR RecyclingGmbH & Co., said the recycling industry now employs some 1.6 million people worldwide and collects, trades and processes around 800 million metric tons of secondary commodities.
Much of the recent growth in recycling has been spurred by the surge in economic activity in China and other Asian nations, Rubach noted. He showed a chart of the world’s largest companies (based on market capitalization) in 2000 and in early 2011 and pointed to the major differences.
“In 2000, [these] companies came largely from the U.S.A. and Japan and were mostly technology and telecommunication companies,” he said of a list that contained Cisco Systems, Vodafone, NTT Docomo and Nippon Telegraph.
“In 2011, the mining and energy industries have taken the lead, and three of the 10 largest companies are from China,” he said of the updated list that contains Petrochina, two Chinese banks, Petrobras of Brazil and BHP Billiton of Australia.
In addition to investing in different companies now, fund managers are also investing in a newer financial instrument—the exchange-traded commodity fund (ETF).
Citing information from the FAZ research report by United States-based Direxion Funds, Rubach showed attendees how investors had placed some $7 billion in commodity-centric ETFs as of early 2006. By the end of 2010, that figure had grown to $163 billion invested in exchange-traded commodity securities. “The financial sector is heavily investing in raw materials,” stated Rubach.
In the recycling industry, Asia’s growth has meant that Turkey (steelmaker for the fast-growing, oil-rich Persian Gulf region) has become a major ferrous scrap importer, bringing in from 15 to 19 million metric tons of ferrous scrap each year since 2006. South Korea has remained an active scrap importer while China and India also have become larger importers.
“We see a global imbalance of scrap availability vs. scrap demand,” said Rubach. The situation “makes free trade so important. If there are [restrictive] export laws, the whole system will not work,” he stated.
Rubach pointed to Russia and Ukraine as nations where scrap export barriers have been erected. “This has a big effect on Turkey,” he commented. “It then looks to Europe and the East Coast of the United States” for ferrous scrap.
Regarding when China’s steel production will peak (or at least hit a plateau) and when it will be self-sufficient in ferrous scrap, Rubach pointed to a recent study that predicted that China should reach its steelmaking plateau in 2024 or slightly earlier.
China’s ability to supply its own steelmakers with scrap will not necessarily occur then, said Rubach, because much of China’s scrap reservoir will still be part of buildings and large public works structures that will not be available as scrap.
In the near term, nations like Turkey and China that need to import scrap could run into supply issues or problems “getting enough scrap if the economies of the United States and European Union improve,” said Rubach.
“In the long run, there will always be enough scrap, but in the short-term there can be a lack of scrap and tight iron ore markets,” Rubach concluded. “This shows we need to make recycling even more important than it already is today.”
The 4th China International Metal Recycling Conference, organized by the Metallurgical Council of the China Council for the Promotion of International Trade (MC-CCPIT), was held May 13-14, 2011, in Guangzhou, China.
