Makers of size-reduction equipment that serve the scrap wire and cable sector have seen a considerable uptick in demand for their equipment ever since China’s government has enacted measures to stem the flow of unprocessed wire and cable scrap into that nation.

At the convention hosted by Institute of Scrap Recycling Industries (ISRI) in Las Vegas in April, ISRI2018, many vendors that specialize in wire and cable shredding and granulating equipment headed into the show with full order books stretching into 2019. At the conclusion of the show, their orders in hand only increased.

According to scrap recyclers and the vendors that serve them, a number of factors are involved in the current round of equipment purchases, and buyers are taking more than one approach to the changing global market for wire and cable scrap and the metals found within it.

Home chopping network

China’s government ratcheted up its scrutiny of the nation’s inflow of lower grade scrap shipments with its Green Fence initiative in 2013. The brunt of that scrutiny fell most heavily on postconsumer plastic and paper scrap shipments.

The National Sword campaign and follow-up policies in 2017 and 2018, however, have cast a wider net, with plastic-coated wire and cable scrap among the materials no longer welcome at Chinese ports.

Many China-based processors and buyers of these materials reacted by setting up wire and cable processing facilities in nearby nations, most commonly in the ASEAN (Association of Southeast Asian Nations) region that includes Malaysia, Thailand, Vietnam and seven other countries.

Even with this shift, processors in North America now have the opportunity to purchase a sizable amount of wire and cable scrap that for two decades almost exclusively headed overseas.

Established processors generally remain reluctant to dive into handling lower grade wire and cable (with less metallic content), while processors considering entering the sector are calculating whether the return on investment can be worthwhile.

Such due diligence has only tapped the brakes on wire processing equipment purchases, however, with several processors telling Recycling Today they have invested in their systems in 2017 and 2018.

“We added a complete downstream system to help refine and extract more metallic units, as well as adding pounds-per-hour capacity to our existing systems,” says Jeffrey Mallin of Kansas City, Missouri-based Mallin Cos. (For more on Mallin Cos., see the article “Good intentions, good results,” starting on page 32 of this issue.)

Manitoba Corp. in Lancaster, New York, also has moved forward with investments. The company’s Brian Shine (who also currently serves as chair of ISRI), says, “We have made investments to continue improvements to our chopping equipment [in] an effort to create more efficiency as well as an opportunity for us to begin focusing on some No. 2 insulated wire to chop; previously, we had only focused on No. 1 insulated.”

The general manager of another wire processing firm, who prefers to remain anonymous, says his company has made many recent investments, including adding one chopping line, upgrading another, running a second shift and adding plastic chopping equipment. He says his company’s focus remains on processing higher grades of material while it continues to seek outlets for lower grade materials.

Value in flexibility

Some recyclers see wire processing system flexibility as critical. “Our company philosophy has always been to be as flexible as possible regarding our systems,” says Mallin, whose company has been using shredding and granulating equipment to process wire for 50 years.

He adds, “Equipment [that] can run as many recycling streams as possible seems to give us more opportunities.”

Beau Janzen of Huntington Beach, California-based Copper Recovery says the abrupt adoption of new policies by China’s government demonstrates that such flexibility can be rewarded.

Copper Recovery processes wire and cable using equipment that the firm manufactures and sells. The company also represents a handful of European recycling equipment manufacturers.

“The Chinese government’s actions make one thing clear—they can do whatever they want whenever they want, and it can severely affect how you do business,” Janzen says.

He adds, “Processing wire in-house and generating pure copper chop opens foreign and domestic doors while offering a level of protection against external forces that are out of your control.”

Installing a preshredder can result in processing flexibility, Janzen says. “Low-grade wire takes longer to process [with a traditional granulator] due to lower density and lower copper content. It is more expensive to process, so adding [a preshredder] helps a lot in this regard. Not to mention, when [recyclers] have a shredder, they can process other items, like clean aluminum-copper radiators.”

David Siejka of Buffalo, New York-based Wendt Corp., who sells France-made MTB wire processing systems to the North American market, says, “Most existing wire choppers are [either] currently running an old or outdated chopping system that is not as effective at processing low-grade wire, or they have exceeded the capacity of their current [line] and they need to add additional capacity in order to process the abundant low-grade wire that is now available.”

He adds, “With the recent regulatory changes, companies either need to invest in chopping equipment or pay someone who already has equipment to do so.”

Janzen says much of his company’s product portfolio likely will sell out in 2018. Despite these positive signals, processors should invest cautiously.

Reasons for caution

Mark Lewon of Salt Lake City-based Utah Metal Works, who served as Shine’s predecessor as ISRI chair, says he regulary looks into the prospect of processing lower grade wire and cable but is unlikely to move in that direction in 2018.

“In terms of lower grade wire, for us it’s an opportunity cost,” he says. “If we chop lower grade wire, we lose the time to chop better material with a higher recovery rate.”

Lane Gaddy of El Paso, Texas-based W. Silver Recycling Inc. sees similar caution signs, saying, “We are in a wait-and-see mode. The appeal to invest to process lower grades is obvious, but we think it is a tad premature to be [incurring capital expenditures] with this strategy until the material is proven over a longer term to be available and not leaving to new destinations overseas.” (W. Silver Recycling was profiled in the May 2018 issue of Recycling Today in the article “Building bridges.”)

Although Janzen sells wire processing equipment, he says he urges customers to add a second or third shift when they run into new opportunities. “If feasible, this is the ideal way to increase production volume while not investing in additional equipment.”

However, that approach also faces a barrier, some recyclers say. “Labor is very hard to come by, and that is what we are short of,” Lewon says.

Nonetheless, regarding taking in lower grades of wire and cable for processing in the U.S., Lewon says, “It’s an interesting proposition. Companies can easily take advantage of very high margins to process difficult material at this time.”

Several states away, Mallin sees the landscape similarly. “We are always careful not to chase trends because reaction is always too late,” he says. “We stick with a company strategy of manageable growth, allowing us to serve our customers properly. In other words, we are cautious not to extend ourselves into this volatility too much but to stay with our plan for long-term success.”

A few more states to the east, Shine says low-grade materials are abundant, but buyers of copper and aluminum chops will not lower their quality expectations. “Supply side is available to those that maintain a tremendous industry reputation, and the key differentiator is to produce high-quality material and to perform to exacting customer requirements,” he states.

The author is editor of Recycling Today and can be contacted at btaylor@gie.net