ISRI’s 2021 Summer Board of Directors and Committee Meetings began Tuesday, July 13, and ended Friday, July 16. Here are some highlights from the Ferrous Division meeting on July 14.
In light of the Biden administration’s recent executive order on promoting competition in the U.S. economy, Surface Transportation Board (STB) member Michelle Schultz was a very welcome guest speaker to kick off ISRI’s Ferrous Division meeting. She took questions from ISRI staff and members. Schultz noted the executive order’s goals, and said the STB’s priorities largely will depend on input from stakeholders.
Ferrous Markets Update
Joe Pickard, ISRI’s chief economist and director of commodities, provided a markets update, starting with June producer price indexes for recycled commodities. Iron and steel scrap prices rose 9.9% compared to May, and year-on-year were up 90.7%. This is also the case with other year-on-year metal gains, including aluminum and copper base prices. There’s some concern that prices are rising too quickly, and the Federal Reserve may put the brakes on price appreciation if it begins to cut back on monetary stimulus.
Pickard notes the Conference Board forecasts U.S. real GDP growth will rise to 9% (annualized) in the second quarter of 2021, and will increase 6.6% year-over-year compared to 2020. Goldman Sachs survey takers indicated the Fed may raise rates sooner than anticipated, but won’t likely taper its asset purchases. That should keep interest rates low even if the Fed authorizes an increase. The Fed believes current price increases are temporary and will decrease when supply chain bottlenecks are resolved.
Ships, Railroads, and Trucking
Billy Johnson, ISRI’s chief lobbyist, discussed how the executive order may impact ocean shipping lines and the Federal Maritime Commission (FMC). Johnson believes the order will give the FMC momentum to begin proceedings and push enforcement, especially in light of the agency’s current Fact Finding 29, which is investigating a host of issues including detention and demurrage practices, and the shortage of ocean shipping containers.
Concerning railroads, Johnson noted there will be an upcoming petition for a proposed rule submitted to the STB by several companies and associations. The proposed rule will ask for railcar demurrage, arguing that if railroads don’t deliver, shippers should be able to charge them demurrage. “That would change the ball game,” Johnson says.
A new California law known as AB5 aims to reclassify a large number of independent contractors as company employees. It adopts a new “ABC test” for classifying labor that would prohibit motor carriers, including recyclers, from using independent-contractor drivers. After losing a challenge to AB5 in the 9th U.S. Circuit Court of Appeals, the California Trucking Association (CTA) plans to appeal to the U.S. Supreme Court.
After Johnson’s updates, the Ferrous Division passed a motion to set aside $350,000 for all transportation issues that affect the recycling industry.
Johnson briefly mentioned legislation drafted by congressmen John Garamendi, D-Calif., and Dusty Johnson, R-S.D., members of the House Transportation and Infrastructure Committee. The draft bill would require ocean carriers to accept all U.S. export container bookings. ISRI and the National Industrial Transportation League (NITL) have educated the representatives about ISRI’s proposal and NITL’s suggestions to reform the Shipping Act of 1984. While the NITL proposal would grant the FMC more authority, ISRI’s main ask is for an annual FMC report to Congress on shipping issues.
Auto Recycling Committee
Steve Levetan, vice president at Pull-A-Part, gave several updates. He discussed federal recalls, specifically the prohibition on reselling parts recalled due to safety concerns. It’s difficult to identify those recalled parts, but ISRI has been working with a vendor that uses vehicle identification numbers to find recall information for specific vehicles.
Levetan discussed the current work to prevent catalytic converter theft. ISRI’s Catalytic Converter Working Group has several elements members can propose for lawmakers developing bills to cut off “core” buyers and ensure only licensed and registered secondary metals recyclers buy and sell catalytic converters. Tennessee and South Carolina catalytic converter theft laws take many elements developed by ISRI’s working group. Minnesota has a pilot marking program for the catalytic converters; Levetan noted the importance of incorporating high-temperature spray paint which serves as a visible deterrent to thieves.
He also discussed ISRI’s joint working group with the International Association of Auto Theft Investigators (IAATI) and the National Insurance Crime Bureau to fight catalytic converter theft. On March 18, ISRI and IAATI published a press release with tips for vehicle owners.
Levetan spoke on the issues surrounding EV batteries and lithium-ion batteries. While they can be recycled, costs currently exceed the value. There are also issues surrounding safety, and safely handling batteries. Levetan notes that working with all stakeholders can start to bring about real change.
David Wagger, Ph.D., ISRI’s chief scientists and director of environmental management, said the National Vehicle Mercury Switch Recovery Program (NVMSRP) allows for the safe and secure removal of mercury switches from vehicles. In 2006, the Environmental Protection Agency, ISRI, and other stakeholders agreed to establish the NVMSRP to remove switches containing mercury from recycled vehicles. In 2018, the NVMSRP was extended through Dec. 31, 2021.
The program can be extended if the parties agree it is necessary. ISRI consulted the Steel Manufactures Association and the auto industry, and both are willing to continue funding the program. The Ferrous Division approved a motion that ISRI supports extending the NVMSRP through the end of 2026.
EU Carbon Announcement
Adina Renee Adler, ISRI’s vice president of advocacy, provided an update on the EU’s plan for reducing carbon in Europe. Its goal is to reduce net greenhouse gas emissions by 55% by 2030, and to become the first climate-neutral continent by 2050. The EU is proposing a new carbon border adjustment and a carbon price on imports of certain products from countries that the EU believes don’t equal its member nations’ levels of climate regulation, carbon reducing mechanisms, or carbon pricing. Iron and steel are on the EU’s list of targeted goods, but scrap and various unwrought aluminum are not. While it won’t impact direct trade of recycled materials, the policy likely will impact customers trying to trade in aluminum and aluminum products into the EU.
U.S. Mint’s Mutilated Coin Redemption Program
Johnson briefed the division on the U.S. Mint’s Mutilated Coin Redemption Program, where individuals and businesses exchange damaged or mutilated coins that are no longer acceptable as legal tender. On May 5, the Mint announced plans to revise the program, including a prohibition on redeeming coins damaged during the recycling process. ISRI submitted comments advocating its reinstatement and providing recommendations to strengthen the program, including the introduction of a rigorous certification process.
The meeting concluded with a plug for the upcoming SREA webinar Managing Superfund Risk: The SREA Exemption & ISRI SREA Reports on July 21, the Sept. 22-24 Commodity Roundtables Forum in Chicago, and the Shredder Ops meeting.
Image courtesy of ISRI.