by MAURA KELLER
In the last few years, the metals recycling market has undergone significant growth as the demand for both recycled ferrous and nonferrous metals continues to rise.
Isaac Dietrich, is the founder and chief financial officer of the metal recycling company, Greenwave Technology Solutions, a leading operator of metal recycling facilities that collect, classify and process raw scrap metal, both ferrous and nonferrous, for recycling.
“At Greenwave, we continue to see robust demand for our ferrous and nonferrous products. We recently invested $15 million installing a second automotive shredder along with a downstream processing system, which is expected to double our current ferrous metal processing capacity and significantly increase our recovery yields of nonferrous metals,” Dietrich said. They are also investing in the infrastructure needed to meet the significant demand from customers for mill-ready shred and other products.
Dietrich pointed out that while ferrous prices have come down considerably from 2022 levels, they are continuing to process near record volumes of scrap metal.
Fastmarkets, a cross-commodity price reporting agency, recently reported that “a resurgence in deep-sea ferrous scrap exports in August and the gradual abatement of the summer doldrums, along with tight supply, are giving rise to growing bullish sentiment for the subsequent U.S. ferrous trade.”
And just over half of those surveyed by Fastmarkets – 52.83 percent – expect prices to rise month on month in the upcoming trade, with a majority – 35.85 percent – attributing this potential increase to lower scrap supply. “Among respondents, 30.19 percent believed that scrap would trade sideways in September,” Fastmarkets noted.
According to George Lucas, chief executive officer, Accurate Converter, which focuses on the precious metal market with concentrations on platinum, palladium, rhodium and iridium, currently the precious metals market is in flux between recent historical highs and current short term lows.
Lucas pointed out that since the largest users of palladium and rhodium are global auto manufacturers, the uncertainty around new technologies like hybrids, full EV and hydrogen fuel cell has the purchasing of these commodities on a short leash.
“Most auto manufacturers are coming to the realization that the lofty, and in most cases unrealistic, goals set by politicians to adapt to the new ‘green economy’ are not attainable either from the standpoint of raw materials needed to make batteries and other components or from the infrastructure perspective,” Lucas said. “If 30 to 40 percent of vehicles in the U.S. were quickly converted to EV, the electrical grid would collapse. We, in the recycling industry, see prices of platinum, palladium, and rhodium stabilizing short term, but steadily increasing gradually and in a controlled manner. Copper, steel and aluminum should also see more stabilization going forward.”
Facing Challenges
As metal prices have come down from historical highs, many of the companies and businesses that generate spent auto catalysts, for example, have tended to hold on to their material hoping prices rebound. As Lucas explained, since the value of a used catalytic converter is directly affected by the precious metals contained in each one, a drop in price – as his team at Accurate Converts has seen over the last six months – has significant effects on prices.
“An average converter at the end of 2022 and beginning of 2023 was in the $200 to $300 range – the average is now $100 or less. For a business, like an automotive salvage yard that processes scrap cars from end-of-life or accidents, the converter is a large portion of what they recoup from that vehicle,” Lucas said.
“Long term, we’re focused on meeting the growing demands of our clients for certain products utilized in the electric vehicle and infrastructure supply chains,” Dietrich said. “I think too many people in our industry are focused on the short-term outlook for steel or other metal prices. While important, we believe it’s vital to step back and analyze where our industry will be in the next 3, 5 and 10 years – which products will be utilized in electric vehicles, ‘green steel,’ and in certain supply chains.
Between the Inflation Reduction Act, CHIPs Act, and U.S. Infrastructure and Jobs Act, Dietrich expects to see a demand surge for domestic steel in the coming quarters.
“With the significant supply/demand imbalance expected to continue for the foreseeable future, Greenwave has recently invested more than $15 million in capex to double our ferrous metal processing capacity, Dietrich said.
The Global Steel Climate Council (GSCC) recently released its Steel Climate Standard, which is used to measure and report steel carbon emissions. It stated that recycling is a means to enable the decarbonization of steel production. The standard could be used by steel producers to further establish sustainable supply chains.
In response to the GSCC Steel Climate Standard, ISRI president Robin Wiener stated, “The GSCC Steel Climate Standard is the right approach to leveling the playing field among steel producers, while also recognizing the key role that recycled steel plays to meet decarbonization goals in the decades ahead. The use of recycled products is key to decarbonizing steel production and manufacturing supply chains around the globe. The recycled materials industry provides high-quality, low-carbon steel to the global supply chain.”
Looking ahead, according to Transparency Market Research, the global scrap metal recycling market is estimated to grow at a CAGR of 6.1 percent from 2023 to 2031, and sales of recycled scrap metal are slated to total $78.1 billion by the end of 2031. Advancements in technology are to thank for the increase in recycled metals as a proliferation of technology takes hold of the scrap metal industry including artificial intelligence (AI), machine learning and the Internet of Things (IoT) as part of the scrap metal recycling process. As Transparency Market Research pointed out, these technologies are expected to increase efficiency, accuracy, and cost-effectiveness, thereby enhancing overall recycling operations.
Streamlined efficiencies aside, the ferrous and nonferrous scrap industries continue to face their own set of challenges, including the war in Ukraine, which continues to affect pricing, and a complicated international scenario with the demand for scrap metal continually in flux.
“There are many challenges we face today, but the largest by far in our industry has been the combatting of converter theft across the country. Many of the larger criminal elements have been eliminated and with the price drops and values of converters versus last year, theft overall is down,” Lucas said. “We, along with many companies in the industry have banded together to create steps to deter and eliminate theft going forward. From detailed compliance processes that vet potential customers, significant record keeping of each and every transaction and working closely with law enforcement, we’ve put a huge dent in the criminal element and will continue to do so.”
Lucas added that the outlook for palladium and rhodium, for example, will directly be affected by the speed at which new technology takes hold since those two metals rely almost exclusively on automotive catalyst uses. “Platinum, on the other hand, is being used in much of the new technology like hydrogen fuel cells,” Lucas said. “As hydrogen becomes more main stream and technology is updated both for the production of hydrogen and the use of it in fuel cell technology, platinum could be the one metal to stand out going forward.”
