Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

“Bigger is better” has often been the paradigm and has been true in many aspects, especially in the shredding business. However, several believe the industry is shifting away from mega shredders and towards smaller, mobile units.


Some mobile shredder manufacturers see a new trend where collection yards prefer autonomy instead of being under the tutelage of mega shredders. Some dealers also cite the positives when considering the reduced barrier to entry with the availability of modular and mobile shredders. 


On the flip side, financing is currently at historically low rates. We are in a commodity bull market that leads sellers to invest in more throughput capacity. However, a change in the interest rate markets could lead to a substantial correction. Current price levels will therefore need to be sustained to support inbound volume and a shredder processor’s ability to service debt. 


Centralization vs decentralization

The future of the metal scrap industry will evolve around finding an answer to the key question: Will the industry revolve around large, capital intensive, centrally located by population, mega shredders, or will it evolve to smaller, decentralized, more abundant mini shredders? 


For example, mega shredders in large population areas must feed their appetite by gathering scrap from approximately 10-12 feeder yards within a 50-mile radius. Is it better then, to process scrap by placing smaller shredders on-site at each of the 10-12 feeder yards? 


A dealer may opt for a smaller investment when there is a dearth of throughput. Similarly, mobile unit manufacturers have progressed to producing output capacities in mobile shredders that are like mega shredders. 


Another factor is risk tolerance when dealers opt for a mega or mobile shredder. For example, mega shredder operators could raise the price they are paying for hulks to secure more feedstock if they are not receiving enough scrap, to balance the gap. 


Thus, companies like 3tek, for example, build around the premise of making mini versions of a mega shredder at affordable prices to be placed directly at feeder yards, so that the yard is not held captive by a stationary unit and can chart its own destiny. Smaller systems sell directly to foundries with the exact end-product as a mega shredder.


Moreover, a decentralized unit does not have to worry about hauling expenses and consequently saves trucking costs.  Conversely, mega shredders may be located much further away and transportation and resulting costs to the yard may climb. 


The spread of what dealers buy and what they can sell to a foundry holds a typical delta of $100 per ton. 


Few mega shredders have been sold in the past decade, but several more mini shredders have been sold during this time. Smaller also means decentralized and therefore more scrap per capita. 


Another factor entails who the average scrap recycler chooses to do business with. Often a peddler may not want to drive downtown, preferring local neighborhood facilities. Local outlets may put a bit less but provide savings and convenience for the driver.


The environmental factor

Shredders may use a diesel engine or electric motor. Electric engines do not produce nitrous oxide (NOx) since they are driven by electricity. Coal-fired plants that made electricity, may produce this gas, but it is not emitted at the site running the shredder. 


Diesel, on the other hand, will emit NOx and particulate matter. Thus, industrial engines running such shredders must be Tier 4 certified. Still, diesel offers some benefits regardless of size. Diesel engines’ fuel tanks can run independently from a power grid, while electric engines need a sufficient power connection to utility, which can be expensive. Millions of dollars are involved for the utility needed to bring transmission to the site though some yards have nearby power based on their location. 


So how is a mobile shredder different? Here are some features that can help differentiate a mobile shredder from a mega one:


Shredder size

A mega shredder entails 5,000-12,000 horsepower and can process about 200 tons of material or more per hour. They are centrally located with 200 tons per hour being fed into it from about 10-12 yards. 

Of these yards feeding into the shredder, each could potentially have a 20-ton per hour mini shredder on-site yielding the same net results.


The smallest mobile shredder entails 1,125 horsepower and can process about 15-20 tons per hour netting the same result as a mega shredder. Moreover, it is not held captive, which gives mobile shredders the freedom or independence in operations.



Both units can process identical feedstock, cars, white goods, and appliances, coming from industrial suburban areas but based on population. However, they have different dynamics in processing ability and location site. 


The population around a mega shredder may determine types of material so location matters. A mini unit is decentralized and therefore does not require long-distance material hauling to reach it, which saves trucking costs.  Mega shredder may be located much further away creating transportation inefficiencies to the yard.


Vehicle scrap in mobile shredders

Most mobile shredders can handle a van or bus, but these vehicles must be processed or broken down into smaller pieces first.


Shred (frag) produced per month

A mobile shredder can produce 15-20 tons per hour. The feed must be quality material with higher metal content such as cars or white goods so that it can create dense frag. Engine blocks, for example, are heavy and their dense cast can produce up to 25 tons per hour. Certain appliances contain mostly insulation and will therefore produce inferior quality frag.


Based on 160-200 hours of monthly operations means a mobile shredder can process 2,000-3,500 tons per month. A stationary, mega shredder, on the other hand, can process about ten times that amount, at 200 tons per hour, 35,000-40,000 tons per month. However, it entails 10-15 times the investment.



A smaller shredder can be typically installed with an outlay of $3-3.5mn, which includes the cost of the actual machine but investments in installing concrete, site prep, add-ons, and other costs to aid feeding the machine. A mega unit will not only cost 10-15 times the amount paid for a mobile shredder but will also need the same increase in throughput to make a decent spread from input to selling the goods. This puts pressure on the yard in a falling market.


It is much easier to turn off or move a $3mn machine when needed compared to pausing a $35-40mn larger unit in a subdued market environment.


Annual maintenance

Smaller units capable of 15-20 tons per hour have a return on investment (ROI) of less than three years and can continue to operate for around seven years. This entails maintenance of $35 per ton for owning and shredder operations costs, with financing including diesel fuel, parts, people to run, and operating cost of a shredder.


The maintenance of a unit capable of producing 40-45 tons per hour entails $25 per ton to own or operate with the ability to handle more throughput with a lower operating cost.


For example, if an operator buys intake material at $100 per ton, then sells processed shreds for $200 per ton, it receives a delta of around $100 per ton. Thus, subtracting $35 per ton in maintenance costs, the operator makes a strong profit of $65 per ton.


Bigger machines invest bigger throughput and lower operating costs but need an appetite to feed them.



A small shredder can run anywhere, can be picked up, easily disassembled, relocated, and does not deal with costs of electric lines in the ground.


However, most mobile unit manufacturers recommend the use of electric motors to run these shredders and the operator may need a county permit to run diesel engine-based machines. 

The market is also changing to favor a decentralized capacity where a shredder will process on a small local level instead of a larger scale.


Emissions and regulations

Federal, state, county, and local quality permitting regulations must be considered before installing a shredder accounting for published rules as well as opinions and rulings that fall under a gray area as each state interprets its emission rules differently from the Tier 4 federal emissions rules. 


Thus, emissions are a murky, muddy subject with many different opinions and must be examined case-wise. 


Air quality permits also involve local, state, county, or federal levels making it imperative for an operator to obtain the needed expertise or hire environmental consultants who are more adept at this work. 


Essentially, operators are required to understand volatile organic compounds (VOCs) that come from metal shredding and having appropriate pollution control systems in place. This may include a regenerative thermal oxidizer (RTO), filter system, wet scrubber, or other emission control tools. 


Benefits and challenges

Industry users of small shredders have noted some advantages and disadvantages regarding the use of mobile units.



The ability to offer customers cost savings in terms of transportation for sending scrap over a long distance is key for operators of smaller shredders. Considering having multiple yards spread out hundreds of miles away from each other, such as in the Pacific Northwest, a processor could feasibly collect scrap for several months at one location then bring the mobile shredder in for many weeks to process the shredded material.  


For efficiency, the dealer can rotate the smaller shredder at each of its yards a few times each year, which could provide, for example, up to six temporary shredding sites.


Mobile shredders can prove more advantageous from the aspect of environmental regulation too since regulators do not spend as much focus or time on smaller operations.  Their focus is typically directed toward larger shredder companies that are required to have a large recycling facility (LRF) permit, such as Nucor-owned DJJ, Omni Source, Alter Trading, or FPT to name a few. 


Let’s not forget the situation Southside Recycling has been enduring regarding overdue permitting for their environmentally compliant shredder operation.


The officials can make the most impact by setting guidelines for larger operators by giving instructions for them to implement, at say, dozens of shredder yards since for equipment manufacturers, the focus is often placed on making products in high demand without requirements to protect all quality standards or practical applications. 



Some of the smaller or mobile shredders have been considered inefficient and lacking the power to process ample volumes. 


According to one recycler, they trialed a mobile unit in the Midwest over the past five years and found it required more input maintenance work compared to its shredding output capability to continue operations. However, scrap dealers who have newly entered the scrap processing business may prefer utilizing smaller shredders when working with limited volumes to limit expenses or other constraints. 


When comparing a smaller shredder to a stationary, mega unit, the former is difficult to retrofit for a VOC system. A structure would typically be needed to attach or install to a VOC system. If shredders were forced to install their machines in a structure to capture VOCs and have contained air systems, the industry may risk the loss of operators in the shredding business.


Some companies that utilize mobile shredders have also been forced to increase environmental compliance to obtain operating permits. Feasibly these companies could try to urge state agencies to force shredders in their respective states to update their existing shredders to meet those same requirements. 

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