The price has been right

Demolition contractors have spent much of the past two decades hoping burglars have not made off with the copper, brass and aluminum found in the buildings they have bid on to demolish.

Ongoing attractive prices for nonferrous scrap have created this good news/bad news dynamic for contractors, who enjoy the lofty pricing at scrap yard scale houses but also know burglars are drawn to abandoned buildings for precisely the same reason.

Global pricing for copper, aluminum and nickel was strong throughout 2021, keeping U.S. scrap pricing aloft. Contractors could see more of the same this year, with companies in the U.S. and elsewhere having made plans to keep their furnaces busy—increasingly with a preference to melt scrap.

Copper burns bright

Copper and brass wires, pipes, tubes, valves and faucets can yield a nice return for demolition contractors of all sizes. Red metals have been red hot since China and other Asian nations began urbanizing rapidly in the 1990s.

Although China’s government made the curious decision to restrict the inflow of these valuable scrap commodities a few years ago, the global market for copper and red metal scrap has not abated as of the start of 2022. China’s reluctance notwithstanding, other metal users increasingly are seeking recycled-content products to meet sustainability and emissions reduction targets.

As of mid-December 2021, brass pipe scrap was fetching $1.10 to $1.50 per pound, depending on the U.S. region, per Fastmarkets AMM surveyed pricing. As measured by Fastmarkets AMM surveys on what dealers were paying for No. 2 copper wire, this scrap was in the $1.70 to $1.80 per pound range in the U.S. during the same time.

Scrap processors that Recycling Today (a sister publication of Construction & Demolition Recycling) reached in the fall of 2021 described demand for red metal scrap that was even able to overcome the logistics and supply chain issues facing the manufacturing sector.

Todd Safran of wire processing firm Safran Metals in Chicago told Recycling Today that domestic and export demand for red metal scrap remained strong at that time.

Because of supply chain issues, he said, “No consumer [mill or foundry] wants to lose much scrap.” Cost-effective trucking is difficult to secure, Safran added. “For the right price, anything can move. But the wrong price can kill a deal pretty quickly.”

Another processor, Joel Fogel of Middletown, Ohio-based Cohen, also told the publication that demand and pricing were strong for red metals. “The market ran up quite a bit [and] spreads haven’t widened, and that tells you something. It’s an indicator of strong demand.”

A dynamic in the copper market for the past three decades has been the willingness of overseas scrap buyers to lure high volumes of U.S. red metal scrap offshore. Processors are poised to soon have more domestic melt shops seeking metal, prompting Fogel to comment when looking ahead to 2022 and beyond, “I think there will be more demand for secondary type copper in the United States that hasn’t existed.”

Offshore sales are facing an additional barrier in Malaysia, where the government has set up the types of restrictions and inspections that helped turn a red-hot market in China to a case of the chills.

However, as long as Asian countries continue to experience increased urbanization and growth in its manufacturing sector, copper scrap is likely to make its way to India, Thailand or other nations on that continent where it can be processed or converted into ingots.

For demolition contractors, remodelers and mixed C&D plant operators that can harvest some copper and brass scrap, the prospect of increased bidding for that material, whether in the U.S. or overseas, will help keep prices aloft.

Keep it rolling

Aluminum and stainless steel (which has a price tied to its nickel content), as with copper and brass, are welcome sights when a demo contractor begins dismantling a structure.

The per-pound pricing for these metals might not usually match copper; but, in some projects, they can contribute a revenue stream that adds margin—especially when prices rise after a bid has been made. In 2021, prices that trended upward helped accomplish that.

As of mid-December 2021, dealers were paying 15 to 25 cents per pound for painted siding after aluminum scrap prices rose steadily throughout the calendar year.

The price of stainless steel scrap, using the 310 grade as a benchmark, was in the $1.30 per pound range in mid-December, based on Fastmarkets AMM surveys of what dealers were paying at their scales.

Aluminum scrap’s story might start with a transaction between a demo contractor and a local scrap yard, but the plot has been picked up by Switzerland-based World Economic Forum (WEF) and the consultancy Accenture.

In early December 2021, the WEF published an online article praising the energy savings and emissions reductions aspects of recycling aluminum. The four co-authors, two of whom work for the WEF and the other two for Accenture, write, “Over 90 percent of current aluminum emissions are associated with primary production. But secondary, or recycled, aluminum uses just 5 percent of the energy required for primary production.”

To take full advantage of those sustainable aspects, the authors advocate boosting aluminum’s already high 73 percent global recycling rate. Demo contractors have helped to get the rate where it is.

Aluminum siding has struggled to retain market share (versus vinyl and composites) in the single-family residential market but remains a factor in commercial buildings.

Stainless steel can be widely used at heavy industrial sites, especially those that include flows of oil, gas or chemicals.

Brussels-based International Stainless Steel Forum statistics show 2020 stainless production fell by only 2.5 percent, despite pandemic-related disruptions. In the first three quarters of 2021, production increased by 16.9 percent compared with the same time frame a year earlier.

The global demand trend for stainless steel—as for aluminum and copper—bodes well for metals pricing that should translate all the way down to the scrap yard scale.

Global commodities markets can turn on a dime, and economists might view the rising inflation rate and questions surrounding China’s ability to keep funding its construction boom as problematic. Should the global economy demonstrate reasonable stability in 2022, though, demo contractors are poised to be pleased with scrap prices.

The author is senior editor with the Recycling Today Media Group and can be contacted at btaylor@gie.net.