RECY SPOTLIGHT ON
CLER ROUNDUP
including Southeast Asia, had to adapt to this dirty blend.”
“When China exited the marketplace, able to supply its own demand for scrap metal internally, the standards for the HMS mix increased because the new leading buyers raised the standard. Buyers wanted 100 percent clean product from U.S. suppli- ers, and that, of course, trickled down to the sellers. With China not buying any dirty material, everyone in Southeast Asia stopped buying, too,” Churchill explains. “As a company, we saw the trend, and we were able to navigate away from others in this cat- egory. We mechanically separate fluff from metal in the shredding process and we are also removing contaminants by addressing them in the disman- tling processes.”
Churchill went to a conference in Southeast Asia last year to network with the steel mill buyers. “We sell 100 percent clean heavy melting steel (HMS) scrap to our customers. We use brokers and traders to get product to buyers, because that way once a container departs our port, the payment is made. Still, knowing the buyers standards ensures top dollar and that ship- ments make it past the buyer’s port. Our attention to quality,. To keep out anything dirty helps profit mar- gins and makes our customers happy,” says Churchill. “In business, you give the customer what they want, and what they want is pure scrap.”
In the flow of things, cars come in from street buys and auctions where they are held for 30 days accord- ing to the DMV law, then completely dismantled and inventoried. They start with fluid drainage in the dis- mantling bays, and removal of ewaste and tires (in CA, tires need to be re- cycled) and evaluation of the rims, if they are re-sellable or scrap. They do a complete tear down and clean ev- erything that can harm the customer
or lessen the scrap value. Then determine if it goes to self- or full-service areas for further processing. What metal is left, they send to their shredder.
The Ups and Downs of Scrap
The scrap metal market is a finicky thing. Under- standing metal value requires knowing the expecta- tions of the commodity customers, and being com- fortable expecting the unexpected.
From the early 2000s, the “California Blend” HMS 80/20 or more like 50/50 ratio of heavy to light steel and trash was an acceptable sellable and profitable commodity to China, the primary buyer of U.S. scrap, notes Churchill. “Because China was setting the stan- dard of what was acceptable, everyone else buying it,
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“These days, if there is any trash in a shipment, it will be sent back at the seller’s expense. All of Asia has adapted this and containers in receiving countries have actually been turned back. Quality is important, now more than ever, in scrap value.” What does this mean to auto recy- clers who all sell their scrap to pro- cessors? “We buy car bodies from other auto recyclers throughout California and a few from Mexico,” says Churchill. “I have to say in or-
der to get premium prices for scrap metal, the days of crushing cars with a recycler’s trash is coming to an end. We pay more for scrap when the auto recycler sends it cleaned up. As in the ‘trash in/trash out’ say- ing, auto recyclers who cease to crush trash or extra tires in their cars will make more money.”
Trends and Forecasting
There are connected industries that can impact profits, timing and costs, and then random occur- rences that impact the market that are unpredictable. “Scrap in 2018 was a difficult year,” says Churchill. “There are the things you can plan for, and other things you cannot. We experienced great growth in the first quarter, and then the marketplace was hit
January-February 2019 • AUTOMOTIVE RECYCLING
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