Trend 1: Quality counts and impurities cost 

It used to be the case that scrap metal from US, Europe and some other countries would be exported to China. As a result of cheap labor, it made economic sense to send scrap metal there, for it to be processed and recycled.

In 2017, US scrap exports were worth a total of $17.9 billion with 31% of these ($5.6 billion) heading to China.

But after China banned imports of scrap metal in January 2021 (it has subsequently allowed some imports that meet very strict quality criteria), exporters looked to other destinations such as Malaysia and Vietnam. As a result, these countries then looked to introduce their own restrictions to ensure the quality of imported scrap metal was high.

While there are some countries that are easier than others to export ferrous and non-ferrous metals to, the overall trend is that global trade of scrap will be based on it being a quality product.

Trend 3: Feedstock of materials is becoming more diverse

The mix of scrap metals to be recovered and the associated complexity of recovery is becoming more complex and challenging for scrap recyclers.

To illustrate this, lets take the example of auto bodies which represent a major feedstock material for scrap recyclers.

Changes to the automotive industry could potentially have a major impact on scrap recycling.

Firstly automobiles (particularly new electrical vehicles) contain an increasingly diverse mix of ferrous, higher levels of non-ferrous and polymer components. This provides both opportunities and challenges for scrap recyclers. Note that the same trend is true for white goods such as fridges which contain more and more electronic components.

The circular economy may herald new models for car ownership where service providers and manufacturers may own most vehicles and rent them as a service to consumers.

Volvo and some other manufacturers have already developed subscription services that means you pay a monthly fee and get the car, maintenance, roadside assistance, and any taxation included in the fee. 

Over time, this shift is likely to mean that there are less cars owned by people, and more by fleet companies. This will mean that these companies will have greater data and ability to predict when they need to replace vehicles and will have contracts in place for dismantling rather than scrapping of these. Indeed, because they will want to be as sustainable as possible, it is likely they will want to see closed loop systems implemented.

Automotive manufacturers are rapidly rolling out electric vehicles (EV), and consumers across the world are moving away from internal combustion engines to EVs. 

These EVs tend to be at the vanguard of sustainability, with manufacturers designing for recyclability. With the need for quality, crushing and shredding cars may not be the most economically and environmentally sustainable action, with dismantling becoming more common worldwide. 

Indeed, the EU is currently proposing an update of its ELV Directive to include more detailed provisions on design of vehicles to facilitate their dismantling and recycling, and the use of recycled materials. 

An example of how EVs are changing automotive recycling is that many EV cars are being fitted with aluminum body panels rather than steel. These aluminum body panels will have higher value than steel, so dismantling for quality makes more sense than shredding for general steel usage.

What do these trends mean for automation of scrap recycling? 

There will be continued strong demand for scrap metals as global economies develop and innovation drives new metal requirements.

Increased market transparency on scrap costs and sale prices means that the timeless challenges of maximizing operational efficiency and reducing cost are now more critical than ever.

According to Mark Valdes-Dapena of AMCS, the industry response should be to embrace automation across the enterprise and adopt a driven approach to making important business decisions. 

Automation can positively impact every aspect of scrap recycling operation and particularly where it links and connects all the processes to ensure maximum visibility on shared data and collaboration.

This level of automation and collaboration is now possible but only by leveraging the latest Cloud technologies.

Despite this innovation, the old industry adage will still prevail that scrap is bought and not sold, so automation should focus on  tight inventory management and increasing cost efficiency across the recycling value chain.

New circular economy models, such as the examples above in the automotive industry will favor companies that can readily share data and collaborate using the latest digital tools with key partners such as suppliers, customers, and manufacturers. 

In summary, the future belongs to those companies that are agile, operationally efficient collaborative and are data driven.

The AMCS Platform for Metal is an enterprise-grade cloud software platform designed to automate and optimize all the processes of a scrap recycling company including, dispatch purchases, compliance, scales, grading, production, inventory management, sales, brokerage and outbound logistics. 

To learn more about the AMCS Platform for Metal, please click here.