Recycled Metals

Canadian Minerals Yearbook (CMY) - 2009

Rob Sinclair

The author is with the Minerals and Metals Sector,
Natural Resources Canada.
Telephone: 613-947-3729
E-mail: robert.sinclair@nrcan-rncan.gc.ca

HIGHLIGHTS

In 2009, Canada exported 5.9 Mt of ferrous and nonferrous metal scrap valued at US$2.6 billion. Total imports amounted to 2.1 Mt worth US$3.4 billion.
Canada’s primary trading partner in recycled metals continues to be the United States. Indeed, 56% of all Canadian metal scrap exports went to the United States and 93% of all Canadian imports were from the United States.
Total Canadian exports of ferrous scrap and slag represented 78% of total exports while nonferrous scrap, ash, and residue accounted for 58% of all imports, both by weight.
Global imports of nonferrous scrap were valued at US$39 billion in 2009, down significantly from US$59 billion in 2008. However, the values for aluminum, copper, and stainless steel metal scrap all showed a general upward trend through 2009.

INTRODUCTION

Metals are the most recyclable materials in our economy. They can be recycled repeatedly without any change in the properties of the metal. To this end, contaminants or impurities within scrap metal need to be identified, quantified, and removed to meet market specifications (for more information on the recycling of metals, visit Natural Resources Canada’s “Recycling in Canada” web site).¹ To speak of recycled content when discussing a metallic item is misleading since all of the metal elements within the item are physically identical regardless of the feedstock source.

The amount of metal recycled and recovered in Canada has never been accurately measured. The structure of the scrap metal recycling industry is complex and layered with a great potential for double-counting since the same material will pass through many hands before it reaches the smelter, refiner, or furnace.

In early 2010, the Canadian Association of Recycling Industries (CARI) estimated that almost 12 Mt of metal material was recycled in Canada in 2008 with a sector employment level of about 34 000. CARI believes both figures are understated and attempts will be made to update these numbers in the near future. For example, Canada’s 145 foundries consume large amounts of ferrous and nonferrous scrap, but data from this sector have been difficult to assemble and are not included in the CARI estimates.

In comparison, more accurate and reliable data are available from Statistics Canada regarding the international trade of recyclable commodities. These data are provided to the Minerals and Mining Statistical Division (NRCan) where the information is loaded into an internal database for synthesis and analysis. In addition, for the benefit of sellers and buyers around the world, the values of these commodities are closely tracked and, from these activities, historical data can be assembled so that Canadian recyclers can stay abreast of global market trends (refer to Figures 1, 2, 10, 11, 12 and 13).

Recyclable metals are a resource, although they may be discarded in the absence of effective collection programs and systems. Previous labeling of these resources as “waste” resulted in onerous regulations (that were intended to deal with real waste-handling issues). The resulting high cost of handling and transporting hazardous recyclable metals has hindered some recovery efforts (e.g., electric arc furnace dust that may contain up to 25% zinc is typically stockpiled in Canada rather than shipped to U.S. facilities that can process it). In fact, the transportation of scrap metal over short or long distances is becoming an increasingly important cost centre for recyclers that must deal with rising energy prices, shippers that prefer higher-valued products, security requirements (radiation scanning, inspections), and environmental programs (emission standards).²

Environment Canada is in the process of updating the regulatory framework for the transboundary movement of hazardous waste and hazardous recyclable materials. One option being considered is the creation of separate regulations for different types of materials, which would result in a distinct regulation for hazardous recyclable materials (such as electric arc furnace dust containing zinc).

CANADIAN TRADE IN RECYCLED METALS

From a sheer tonnage perspective, Canada’s trade in recycled metal is dominated by the movement of ferrous scrap over nonferrous scrap. Figures 1 (nonferrous) and 2 (ferrous) illustrate this point. In 2009, Canada exported almost three times as much ferrous metal as nonferrous metal. In 2006, about 30% more ferrous metal was imported than nonferrous metal, and these proportions were maintained in 2009. The import of ferrous and nonferrous metal scrap has dropped slightly each year since 2007. The export of nonferrous metal scrap has steadily declined since 2007, but the export of ferrous scrap metal rebounded in 2009 after a sudden drop in 2008.

Although Canada has many trading partners, Figures 3 and 4 show that a significant amount of recycled metal is traded with our closest neighbour, the United States. These figures also provide an overview of the value of all recycled metals exported (5.9 Mt valued at $2.7 billion) and imported (2.2 Mt valued at $3.4 billion) in 2009. China’s enormous demand for scrap metal is reflected in its trading relationship with Canada. This is particularly reflected by the amount of scrap exported to China (Figure 3, or 391 000 t) and the amount imported from that country (Figure 4, or 2177 t). The export of aluminum and copper scrap to China has consistently grown every year from 2000 to 2009, replacing trade with OECD³ countries (excluding the United States) and other non-OECD countries (Tables 4 and 5).

“Recycled metals” is a very general heading under which a vast array of different metallic and mineral materials are comprised. This article focuses on the former mainly because of data availability. In Figure 5, four separate but general distinctions are made: (1) ferrous scrap, (2) nonferrous scrap, (3) ferrous slag, and (4) nonferrous ash and residue. For more details regarding the types of recycled metals tracked by Statistics Canada, refer to Table 2 (“Harmonized System [HS] Codes for Recycled Metals”) in the 2005 Canadian Minerals Yearbook. It is interesting to note that, in terms of imports, the total amount of nonferrous scrap material slightly exceeds ferrous scrap material.

Tables 1 and 2 provide a rolled-up summary of Canada’s trade in recycled metals. This trade is divided into four groups: the United States, other OECD countries, China, and other non-OECD countries. Table 1 separates the nonferrous and ferrous data whereas Table 2 combines them. In each table, a distinction is made between scrap on the one hand, and slag, ash, and residue on the other. Slag, ash, and/or residue are reported for aluminum, copper, nickel, lead, zinc, “not elsewhere specified,” and ferrous.

In comparing 2006 with 2009, it is noted that Canada’s exports of recycled metals have increased by 591 000 t, which is about 11%. Over the same period, total imports have increased by 659 000 t, which represents growth of about 30%.

Of all the nonferrous scrap exported by Canadian companies, 80% by weight is comprised of three metal groups: stainless steel (497 000 t), aluminum (365 000 t), and copper (146 000 t). These volumes are considerably lower than what they were three years ago (see Recycled Metals article in the 2006 Canadian Minerals Yearbook). The remainder comprises lead, zinc, nickel, tin, magnesium, precious metals, and various metals described as “not elsewhere specified.” The major imports are stainless steel (345 000 t), aluminum (119 000 t), lead (79 000 t), and copper (42 000 t), representing 67% of total nonferrous scrap imported in 2009. Table 3 provides an overall summary of nonferrous metal scrap traded by Canada. In fact, Table 3 summarizes the data from Tables 4-14, excluding Tables 6(b) and 12(b). The data for each metal-specific table have been assembled using the Harmonized System (HS) codes, which are shown at the bottom of the tables. These codes are used by both the Canada Border Services Agency and Statistics Canada to track trade data.

In previous Canadian Minerals Yearbook articles, trade in recycled lead scrap was summarized in a single table (Table 6). In this year’s article, Table 6(a) provides the same summary (2000 to 2009) while Table 6(b) provides a summary of related but previously unreported trade. Note that the export and import of recyclable batteries containing lead are only available in terms of value and not tonnage. Each of the estimated 9.3 million lead-acid batteries reaching their end of life in Canada each year contains about 10 kg of lead. The North American market for end-of-life lead-acid batteries is closely integrated, with unbroken or broken units, electrode paste, and pure lead components moving north and south of the Canada-U.S. border. Canada’s five lead smelters have an annual capacity of 349 500 t of secondary lead. In 2007, about 185 000 t of lead (from lead-acid batteries) were smelted in Canada.⁴

The group referred to as “precious metals” comprises gold, platinum, and other higher-value metals. Table 11 provides trade statistics from 2000 to 2009. Of the $2.6 billion worth of precious metals imported to Canada in 2009 (up significantly from $1.5 billion in 2006), gold scrap accounted for 84%. The average price for gold in 2009 was US$974 per troy ounce, up 61% from US$604 in 2006.⁵ In terms of exports, 80% was “other (precious) metals.”

Table 12(a) identifies all of the HS codes included in the “not elsewhere specified” (or n.e.s.) group. Table 12(b) shows the annual value of scrap material traded, organized by metal type, from 2000 to 2009. Readers should note that the 2009 data exclude powders and other unwrought materials from the n.e.s. category unless they also fall under the scrap heading. The value of imports and exports of n.e.s. metal scrap in 2009 was considerably lower than it was during the 2004-08 period.

In previous Canadian Minerals Yearbook articles, the stainless steel scrap category included all alloy steel scrap. Since separate HS codes are available for stainless steel (720421) and alloy steel other than stainless (720429), and because the tonnage distinction is significant, the data for each are presented separately in Tables 13 and 14. Some of the nonferrous alloys added to steel include chromium, nickel, tungsten, manganese, molybdenum, and vanadium. In reality, scrap metal recyclers keep the differently alloyed steel metals separate in their yards because steel mini-mills do not recover nonferrous metals from this kind of feedstock. Indeed, alloy-specific steel scrap is generally melted to make new product with the same characteristics. Experienced scrap workers can identify and separate different alloys or use hand-held detection equipment to identify the elemental composition of the scrap steel, which is then categorized according to industry scrap specifications.⁶

INTERNATIONAL TRADE

Global trade in nonferrous metal scrap was in the order of US$24 billion in 2004 and 2005, rising to US$44 billion in 2006. More recent comparable figures are US$57 billion in 2008 and then a sharp decline to US$38 billion in 2009 as a result of the recession. Trade volumes grew from 16 Mt in 2004 to a relative plateau of 19, 21, and 20 Mt in 2006, 2007, and 2008, respectively. The 2009 tonnage was about 17 Mt. To put these numbers into perspective, estimates from the Bureau of International Recycling (BIR) indicate that 400 Mt of scrap metal (all types) are recycled annually around the world, creating more than 1.5 million jobs.⁷

Figures 6 and 7 present an overview of nonferrous metal trade (total global imports) for the scrap category (slag, ash, and other residues are not included in this summary). Copper, aluminum, stainless steel, and other alloy steel dominate in terms of weight and value with precious metals emerging as a significantly valuable recyclable material despite its small tonnage. As shown in Figure 7, the total value of global imports fell from $58 billion in 2008 to $39 billion in 2009. Where the largest nonferrous metal groups are concerned (aluminum, copper, precious metals, and stainless steel scrap), from 2007 to 2009, 50% of global trade went to Europe, 37% to Asia, 11% to North America, and 2% to the remaining regions. Western Europe and China are driving the demand for metal scrap, although the value of total nonferrous imports experienced a large drop in 2009, as shown in Figure 7.

Global trade in ferrous scrap is shown in Figure 8. Worldwide imports show a slight decline beginning in 2005 before reaching a plateau during the 2006-09 period. The value of ferrous scrap imports nearly doubled from 2005 to 2008, but then went back to the 2004-05 level in 2009. Recycling International reported a December 2009 rise in the price of ferrous scrap in both the United States and Rotterdam (for imports and exports) that has carried on into the first quarter of 2010. The rising price of ferrous scrap is the reflection of a global economic recovery as construction activity resumed and consumer purchases (automobiles and appliances) bounced back.⁸

According to the Institute of Scrap Recycling Industries (ISRI),⁹ the United States exported 34 Mt of metal, paper, plastic, and rubber scrap worth approximately US$15.7 billion in 2006. In 2008, comparable figures increased to 44 Mt and US$28.6 billion (data for 2009 were not available at the time of writing). The 2008 tonnage comprised 4 Mt of nonferrous metal scrap and about 20 Mt of ferrous scrap. The scrap metal that Canada received from the United States in that year was valued at $3.7 billion, but the lower tonnage (1.7 Mt) and value ($2.7 million) recorded in 2009 reflected the overall economic downturn that occurred at that time.

As an indicator of an important trading trend, Canada’s share of the U.S. aluminum scrap export market has gradually declined in value over the last six years; it was 19% in 2004, 13% in 2005, and 9% in 2006, but may have reached a plateau thereafter since the figure in 2009 is 8%. Figure 9 illustrates Canada’s 2009 share of aluminum scrap exports from the United States, which amounted to about 152 000 t. This apparent “loss” of aluminum scrap metal has not been offset by gains to any other country. Canada’s second largest source of aluminum scrap is still Cuba, from which 2182 t were imported in 2009.

Canada imported 52-55% of all U.S. exports of nickel scrap during the 2007-09 period, despite the steady decline in total U.S. exports of this commodity (HS 7503) (78 000 t in 2007, 39 000 t in 2008, and 11 000 t in 2009). As far as copper scrap is concerned, Canada’s share of U.S. exports over the last three years is in the 4-5% range with China taking 73% in 2009 (tonnage).

SCRAP METAL PRICES

All scrap metal prices are quoted in U.S. dollars per metric tonne because international commodity markets such as the London Metal Exchange (LME) continue to report material value in that currency to facilitate comparisons. Moreover, the Canadian dollar increased in value against the U.S. dollar throughout 2009 from US$0.82 (January) to US$0.95 (December). The reader can access the Bank of Canada web site to determine current and historical currency conversion values.¹⁰

Figure 10 compares the value of two recycled metal commodities: aluminum and copper. In contrast to copper No. 1 burnt wire, the value of used aluminum beverage cans was relatively stable from 2006 to 2009, with a maximum value of US$2328/t reached in July 2008 and a minimum of US$968/t registered in February 2009, while the average for 2009 was US$1782/t.

As shown in Figure 11, the value of stainless steel metal scrap (comprising 8-12% nickel) reached US$4085/t during the first week of May 2007. Prices were driven by the demand for nickel, some constraints on “primary production, and concerns over a critical short-supply situation.”¹¹ The average settlement price for nickel in 2007 was US$37 320/t.¹² When the nickel market declined with the global economic downturn, the value of stainless steel scrap (18/8, processor solids) reached a low of US$492/t during the last quarter of 2008. During the 2002-09 period, the average price of stainless steel scrap was US$1535/t, with a 2009 average of US$1401/t. Figure 11 suggests that this commodity is on an upward trend yet again.

The value of ferrous scrap metal is considerably lower than for nonferrous scrap metal. However, significantly more ferrous metal scrap is traded, as reflected in Figure 2 versus Figure 1, and in Figure 4. In mid-2005, some ferrous scrap metals were traded at relatively low levels, moving upwards through 2006 and 2007 until the large price spikes of early and mid-2008, which were followed by the sharp decline in the last quarter of 2008, as illustrated in Figure 12. In 2009, a gradual recovery of ferrous prices to 2006-07 levels occurred.

The number of ferrous scrap categories is extensive, as presented in the Scrap Specifications Circular released every year by the Institute of Scrap Recycling Industries (ISRI), which is a U.S.-based organization that helps set standards for the North American market. As shown in Figure 13, selected ferrous scrap metal grades saw steady price increases from 2005 to 2008 and then they declined in 2009 to 2005 levels.

ENDNOTES

¹ Recycling in Canada web site, www.nrcan-rncan.gc.ca/mms-smm/busi-indu/rad-rad/rad-rmt-eng.htm#a.

² Mike Breslin, “Escalating transportation costs deflate profits for scrap metal exporters,” American Recycler, May 2010.

³ For a list of countries in the Organization for Economic Co-operation and Development (OECD), consult www.oecd.org.

⁴ The five secondary lead smelters are Newalta (Que.), Tonolli (Ont.), Teck (B.C.), Xstrata (N.B.) and Metalex (B.C.); see Kelleher Environmental, Battery Recycling in Canada – 2009 Update, Environment Canada, www.ec.gc.ca/gdd-mw/default.asp?lang=En&n=52DF915F-1.

⁵ www.MetalPrices.com.

⁶ The Institute of Scrap Recycling Industries’ Scrap Specifications Circular for 2009 is available at www.isri.org/AM/Template.cfm?Section=Home&CONTENTID=22142&TEMPLATE=/CM/ContentDisplay.cfm

⁷ www.hardassetsinvestor.com/features-and-interviews/1/642.html.

⁸ Recycling International, December 2009 (p. 41) and April 2010 (p. 67).

⁹ ISRI 2008 Scrap Recycling Industry Facts.

¹⁰ Bank of Canada, www.bankofcanada.ca.

¹¹ Recycling International, April 2007, No. 3, p. 88.

¹² See Canadian Minerals Yearbook, 2008, Nickel chapter.

Notes: (1) For definitions and valuation of mineral production, shipments and trade, please refer to the chapter entitled “Definitions and Valuation: Mineral Production, Shipments, and Trade.” (2) Information in this review was current as of August 31, 2010. (3) This and other reviews, including previous editions, are available on the Internet at www.nrcan-rncan.gc.ca/mms-smm/busi-indu/cmy-amc/com-eng.htm.

Note to Readers

The intent of this document is to provide general information and to elicit discussion. It is not intended as a reference, guide or suggestion to be used in trading, investment, or other commercial activities. The author and Natural Resources Canada make no warranty of any kind with respect to the content and accept no liability, either incidental, consequential, financial or otherwise, arising from the use of this document.

Figure 1
Canada, Trade in Nonferrous Metal (Scrap, Ash and Residue), 1993-2009