Speaking at the Spotlight on Copper session at the Institute of Scrap Recycling Industries (ISRI) Kymera International’s 2022 Convention & Exposition in March in Las Vegas, Trent Poland offered scrap metal workers in attendance insight into the business disruptions affecting a scrap consumer’s day-to-day operations. “I share my experience within my company. I can’t speak authoritatively about the entire scrap copper consumption segment,” he said, “but I can give you a few data points that I think are common issues.
Poland is the commodities manager for the North Carolina-based company Kymera International, a specialty materials company specializing in non-ferrous powders, granules and pastes, including aluminum, copper, tin, tantalum, titanium and their alloys, as well as master alloys of vanadium, niobium and of molybdenum. Kymera sells its products in the aerospace, medical, electronics, chemical and specialty automotive markets. Kymera International has manufacturing facilities in the United States, Australia, Europe and Asia. Poland, which is based in Tennessee, buys scrap metal for six of Kymera’s facilities, although the company has 12 locations around the world.
The issues affecting Kymera’s operations are macro-economic and “and generally beyond our control”, Poland said, as well as micro-economic and can be controlled to some extent.
“Even at the best of times, forecasting demand is a bit like playing a wheel of fortune,” Poland said, explaining how “in normal times, our customers’ drawdowns were largely predictable, and it wasn’t a very big problem.” However, since the pandemic, customer withdrawals “move in odd spurts, stops and accelerations”.
Factory management is trying to match factory output with sales forecasts, Poland said, “but unexplained mechanical breakdowns are happening. And now supply chain disruptions are pushing us to find solutions. replacement parts. We often have to wait for a back order to fix or dispatch an engineer to a problem. What was once a 15-minute fix is now a five-day headache.
The staff shortage has “put production planning into triage mode”, Poland added.
Requests for scrap delivery appointments can be delayed “because we often wait for other departments to release their forecasts,” he said, adding that wild swings in delivery appointments are common. “Recently, I literally started a Monday with a three week backlog for delivery appointments, and on Wednesday I was asking people if they could bring me a load that Friday morning.”
Poland suggested that recyclers notify their factory customers or brokers if they have loads ready to ship even if their appointments are off by a week. “That way, if the factory starts crying out for material, we know who to call first.
“For factories, the chaos of trying to predict what we’ll need when is compounded if scheduled deliveries miss their appointments,” Poland continued.
He recommended scrap metal workers make sure their loads are ready to leave for their appointments. “These days, trucks are hard enough to find without shooting themselves in the foot by not having the material ready to ship.”
While Poland said factories are normally dealing with disrupted supply chains by carrying more inventory, with metal prices at record highs, financial services are discouraging this. “Paradoxically, we have to reduce our stocks of raw materials at the worst possible time,” he said.
“My advice to you is, again, to stick to your delivery appointments,” Poland said. “Because if one of my factories stops producing, inventory starts to swell, then finances start to sweat. If you miss a delivery appointment, you just volunteer to help solve my problems.
Poland also said his company was seeing a “record number” of yards running late for their deliveries, adding that many sellers appeared to be overestimating the flow of scrap metal through their scales. “And as we reached new COMEX highs, shippers stalled loads. I might suggest that one be triply careful not to oversell one’s position,” he said, noting that he, too, has “burnt in the opposite direction”.
Poland added: “Let an extra measure of caution dominate the day.”
He noted a decline in the quality of scrap in the first months of the year, noting that factories are producing “too much slag, baghouse dust and rework”. Poland attributed the decline in scrap quality to labor shortages, but reminded scrap processors that downgrades and rejections will eventually result.
“My recommendation would be to increase your quality checks,” he advised. “Do an extra check before loading the truck at the factory and increase your spot checks behind your new, inexperienced sorters.”
Short loads have also been an issue, with Poland noting that truck loads of scrap metal, which normally averaged between 42,000 lbs net and 42,500 lbs net, come in at 39,000 lbs net and even as light as 34,000 net books. “Our current average is now under 41,000 pounds per truck,” he said. “It exposes the consumer to market risk, which is precisely what we want to avoid given the recent big moves in COMEX. At some point, you have to buy extra load, just to make up for all those little shortages.”
Poland suggested scrap dealers avoid shipping short loads without first getting approval from the factory, saying “it’s infuriating on our end when we get a 36,000 pound load when the The factory is not in full production, as we could have easily waited a week or two and got the full load instead.
With daily “scrap-induced ulcers”, Poland said creative problem-solving and conflict resolution “are the skills that will get us through it all”.
He said personal relationships have always been an important and unique facet of scrap metal transactions. “For me, this is the fundamental key to overcoming these challenges. Because when things go wrong, and they inevitably will, we have to fix it with our creative problem-solving and conflict-solving skills. And we do it with people with whom we have strong business relationships. That way we can find a solution that we can both live with. And we survive to give up another day.