Just before 8 a.m., Johnson Zeng eases his rented Chevrolet into a space in front of Cash’s Scrap Metal & Iron in St. Louis. He’s in the market to buy scrap metal he can ship to China, and this is the first stop of the day in the middle of a two-and-a-half-week road trip to regular suppliers that started in Albuquerque and will end in Spartanburg, S.C. But that, Zeng says, is nothing. “My last trip with Homer,” he recalls, referring to Homer Lai, the scrap importer in China’s Guangdong Province who provides him with most of his business, “we drove 9,600 miles in 26 days.”
The result? Millions of pounds of metal worth millions of dollars left the U.S. for China.
Zeng is one Chinese trader, in one rental car, traveling across the U.S. in search of scrap metal. By his estimate, there are at least 100 other Chinese traders like him driving from scrap yard to scrap yard, right now, in search of what Americans won’t or can’t be bothered to recycle. His favorite product: wires, cables, and other kinds of copper.
It’s an essential trade. In 2012, China accounted for 43.1 percent of all global copper demand, or more than five times the amount acquired by the U.S. that same year. A modern economy can’t grow without copper. One way to get that metal is to dig holes in the ground; the other is from scrap. Since the mid-1990s, China has taken both approaches, with scrap accounting for more than half of all Chinese copper production every year (peaking at 74 percent in 2000). Because China is still a developing economy, it doesn’t throw away enough stuff to be self-sufficient. Thus, for the last decade it’s imported more than 70 percent of the scrap copper it uses. Meanwhile, the U.S., which throws away far more scrap metal than it can ever use, has become the world’s most attractive market for the savvy Chinese buyer.
In effect, Zeng and his peers are the vanguard of sustainability, the greenest recyclers in an era when that means something. He’s the link that binds your recycling bin, and your local junkyard, to China.
Photograph by Thomas Prior for Bloomberg BusinessweekZeng clicks away at his BlackBerry in his parked car, checking the London metal prices that set the global market for scrap metal. “Market is down.” He sighs. “But we will still try.” He’s a young-looking 42, but when his lips purse with concern—as they do now—his cheeks puff out slightly, highlighting the lines at the corners of his eyes.
The BlackBerry buzzes. “Homer calling,” he says with a whisper as he presses answer and switches to his native Cantonese.
Zeng and Homer are interested in what’s known in the scrap-metal industry as “low-grade.” It’s an important term that means different things to different people. In general, low-grade scrap requires significant work—manual, chemical, or mechanical—to turn it into copper clean enough to be melted in a furnace. Telephone lines and Christmas tree lights are low-grade because somebody, somewhere, has to figure out how to profitably strip the insulation from the metal.
For Americans who care about recycling and preserving resources, the most important thing to know about low-grade scrap is this: It’d end up in a landfill if it weren’t exported. Demand for copper in the U.S. is too low, and labor is too expensive, to be worth any scrap yard’s time.
As Chinese low-grade scrap buyers go, Zeng is midsize at best. The previous night he told me he’ll try to spend $1 million on low-grade scrap for export to China this week.
Zeng wraps up his phone conversation with Homer and slips the BlackBerry into his shirt pocket. “He’s waiting by his computer,” he says as he grabs the car door handle. “I’ll send him photos.”
I check my watch. It’s just before 10 p.m. in China. “He’s staying up?”
“Of course! Some of the material, I don’t know what it is. Only he knows. So I call him. He’s the expert.” Homer is a former barber turned South China scrap-metal magnate. He learned the business by sorting imported scrap metal by himself; after a few years he knew the value of what Americans throw away better than the Americans.
Zeng steps out of the car and opens the trunk. Inside is his suitcase and a hard hat. From his suitcase, he gets an orange safety vest of the kind worn by highway construction workers and slips it over his freshly ironed blue-and-white-checked shirt. Then he reaches into his wallet and takes out a business card, which he inserts into the clear plastic holder sewn into the vest.
SUNRISE METAL RECYCLING
At that, he shuts the trunk and walks through the front door of Cash’s. There’s a window on the other side, a slot through which documents and money can be exchanged, and—on a rickety chair—a sleepy man in a hard hat and greasy clothes who tries to avoid my stare.
“Hello?” Zeng says through the slot.
A middle-aged female face appears in the window, laughing, apparently in mid-conversation. “Can I help you?”
Zeng stands straighter, smiles broadly, and slips a card through the slot. “Good morning, ma’am!” He drags out each syllable with a fawning inflection. “I’m Johnson with Sunrise! I have an appointment with Michael [not his real name]!”
The woman looks at the card. “He’s not in.”
I see Zeng flinch. “No problem, ma’am! Do you know when he’ll be in?”
“Lemme check.” She walks away from the window.
His smile drops. “Always like this,” he whispers. “Always.”
The door opens just slightly to reveal a tall, muscular man in his early 30s wearing a red T-shirt. His hand remains on the knob, and his body leans in the direction of the place from which he came. “Hi, Johnson, I’m in the middle of payroll.” He nods at a ratty leather sofa in the middle of a bedroom-size office. “I’ll be with you as soon as I can.”
As he walks off, Zeng flashes a broad, toothy smile. “Take your time! No problem!”
“I made an appointment last week,” he whispers, his normal soft inflection returning with a touch of bitterness. “It’s always like this. Always.”
I look down at the worn and uneven linoleum floor, permanently stained with what seems like decades of grease and dirt.
“What’re we looking for today?”
Zeng and I peer up from the sofa and the man in the red T-shirt is standing above us, wearing a hard hat and holding a clipboard.
“ICW,” Zeng replies, using the universal shorthand for insulated copper wire. “Also, radiator ends.” Red T-shirt hands me a hard hat, and we follow him out a door at the back of the office and into a narrow, cramped warehouse lined with dozens of cartons the size of washing machines stuffed with scrap metal of various types.
The light is dim and mostly comes from the sunlight streaming through the loading docks. Red T-shirt knows we’re behind him, but he walks quickly. Zeng goes at his own pace, his eyes moving up and down the various piles of scrap. Red T-shirt points at a carton of cables wrapped in dirty canvas. “Lot of this just came in.”
Zeng takes the BlackBerry from his breast pocket, holds it over the box, and snaps a photo. “Elevator wire,” he says, double-checking the image before pressing send. “Goes to Homer.” He moves to the next box, which contains a mix of wires of various types and colors.
In the U.S. and Europe, this mix of wire is classified as ICW and sold at a single price, despite different percentages of copper in each wire type. Once it goes to China, the red wire will be separated from the green, thick from thin. Each type will have its own price and—often—its own market. For Zeng, that’s a matter of paying, say, $1 per pound for something that contains products priced at 60¢, 80¢, $1.20, and $2.20 per pound in China. For the most part, non-Chinese don’t know about these micromarkets, and even if they did, they wouldn’t have access to them because of language and culture. “How much do you have?” he asks.
Red T-shirt looks at his clipboard. “About 8,000 pounds. How about jelly? We’ve got probably 10,000 pounds of that.” He points to a box of 2-inch-thick cables cut into 1-foot segments that ooze both a Vaseline-like substance and hundreds of tiny wires. In a past life those small wires transmitted telephone conversations underground, and the “jelly”—a petroleum product—repelled the moisture that threatened to corrode them. American wire recyclers don’t like it because the jelly gums up the blades in their recycling equipment, so it’s shipped to China, where it’s cut apart by hand and washed clean with soap.
Zeng snaps a photo and transmits it. Then he notices something: “Ah, Christmas tree lights.”
The lights are loose in a box, and Zeng reaches to pull away at the knots, hoping to see if there’s anything beneath them. “Not good quality,” he whispers to me. “They should be baled.” That is to say, they should be compressed into a cube so that nothing can be hidden beneath them in a box. Zeng looks over to Red T-shirt. “Maybe should be priced less.”
“Nah, Christmas tree lights are Christmas tree lights,” Red T-shirt responds.
Zeng stares at the box and clucks his tongue. He wants them.
This is how it goes for the next 10 minutes: Red T-shirt shows Zeng cable television wire (not interested), cable television boxes (very interested), power lines (very, very interested), and other essential accessories of daily life that eventually get thrown away. Zeng takes photos of everything and carefully writes down available volumes.
“Do we have enough for a container?” Red T-shirt asks.
It’s a key question. A standard 40-foot overseas shipping container of the sort that Zeng will send to Homer in southern China can hold 40,000 lb. But here’s the catch: The high cost of moving containers from one scrap yard to another means that each container must be filled up in only one scrap yard, and that means Zeng needs to buy 40,000 lb. of scrap metal at Cash’s—or nothing at all.
He runs his finger down his notes and purses his lips. “We still need 10,000 lb. How about some Christmas tree lights? Do you want to sell them?”
“Let’s go inside, and I’ll check how much we have.”
We follow Red T-shirt back into the office and take a seat on the sofa. But there’s no time to relax: Homer’s number is flashing on Zeng’s BlackBerry. “Must have some new prices,” he says and answers. The conversation lasts less than 10 seconds. “Homer is cautious today,” he tells me as he hangs up.
He opens his notebook and takes out a sheet of paper marked “Purchase Order.” It’s a crude form, obviously made at home on a PC, and—in addition to Zeng’s name and company—it contains the three columns that matter: material, weight, and price. Slowly, he writes:
JELLY WIRE WITH STEEL: 10,000 LB. at 55
GREASE WIRE: 5,000 LB. at 135
#2 INS. COPPER WIRE: 8,000 LB. at 150
He’s beginning the fourth item when he receives another call from Homer. It’s another 10-second machine-gun burst of Cantonese. Whatever was said, it’s enough for him to cross out the first jelly wire price and raise it to 56¢. He writes down an additional seven categories, and by the time he’s done he’s offered to buy close to $60,000 worth of scrap. “Maybe not competitive enough today,” he worries. “Let’s see.”
Red T-shirt looks around the corner. “Stu will be with you in a moment, Johnson.”
Zeng nods to himself. “We used to be able to buy five to eight containers at a time from this yard,” he tells me. “Now lucky to get one. More competition. Some days the yards have two or three teams of [Chinese] buyers come. Seller’s market.”
He places his hands on his knees, takes a deep breath, and then pulls up the current London prices on his BlackBerry. For a moment, it’s quiet but for the distant roar of a machine on the other side of the walls.
I spend six days on the road with Zeng, watching as he scrounges for containers of scrap metal worth as much as $100,000 each, eating off-menu at Chinese restaurants, and sleeping in Red Roof Inns. Some days we drive six hours only to find that the scrap Zeng had been promised was sold a few hours earlier to another roving Chinese buyer; other days, Zeng spends the equivalent of a Lamborghini on scrap.
He says that all of the time on the road can be lonely and frustrating—especially if you’ve been doing it for five years. He has a wife and son in Vancouver, but he spends only about six months of the year with them.
This isn’t the future that Zeng foresaw in Shantou, the modest city in northeastern Guangdong Province where he was born. He’s a polymer scientist by training, and after graduating from college he worked his way up the corporate ladder, eventually landing a senior management position at Sinopec (SNP), a state-owned oil conglomerate.
It was a good, stable life, but Zeng’s wife was eager for change, a life away from China, he tells me during a long drive through Kentucky. After much discussion and contemplation, Zeng moved his family to Vancouver.
That was the easy part.
He went from being a young man on the move with a guaranteed future in a state-owned company, to working odd jobs, including time spent as a renovation contractor, a fruit salesman in Chinatown, and several years working in the dairy department of a supermarket.
Then one morning in 2006 he was reading a Chinese-language newspaper and came across an advertisement for a “trader” that specified neither the company nor the goods traded. “This sounds good to me,” he recalls thinking. “Trader! It’s my favorite job! Marketing!”
The company was looking for someone to join its sales teams prowling North America for scrap metal, and he was offered C$1,200 ($1,143) for three months’ work, plus a $300 bonus if the work took him stateside. Zeng accepted the job, and after a week’s worth of training he was out on the road in a rented car. Two years later he left the trading company and teamed up with Homer, who had his own scrap yard in Guangdong. “After I went on my own with Homer,” he tells me, “I spent seven months on the road. One time I spent seven weeks on the road with Homer without going home once.”
“How much scrap did you guys buy?”
He thinks for a moment. “Hundreds and hundreds of containers.”
In the office of Cash’s Scrap Metal & Iron we wait 5 minutes, then 10 minutes, but nobody comes to take Zeng’s purchase order. While we wait, he stares at the London prices. Then he looks at the Chicago prices. He asks if I mind Chinese food for lunch, and of course I tell him I don’t.
“Johnson?” bellows a big voice. “C’mon in!”
Zeng rises from the sofa and strides into a corner office that overlooks a large, messy desk where Stu Block, the portly, curly-haired founder of Cash’s, leans back in an office chair. There are three other men in the room, and they smile as if they’ve just been privy to a particularly dirty joke that they’ve promised not to share. “Hello, sir! How are you today?” Zeng says, handing over his purchase order. Block runs his eyes over it with a crooked smile. “All right. Let me think. I need to see where the market’s going. I’ll have somebody call you later.”
I turn to Zeng. I look at Block. That’s how he responds to a $60,000 purchase order for something that can’t be sold to anybody in the U.S.? Who the hell else is going to take those ratty old Christmas tree lights?
“Thank you, sir!” Zeng says. “I’ll call later.”
“Take care, Johnson.”
We walk out the door, and as soon we’re on the sidewalk I burst out: “He barely looked at your prices! He’s not interested?”
“Probably not. Too many other buyers. I can tell other buyers were here yesterday. There wasn’t as much scrap as usual.” He opens the car and places his hard hat and vest on the back seat. “It’s OK. Tomorrow we will arrive somewhere before they do.”
As we settle into the car, he reaches into the glove box for the GPS. It contains the names of dozens of scrap yards—Zeng’s supplier network—and he punches up the next one we’re due to visit.
“I was surprised to see so many Christmas lights,” I tell him.
“Big waste country, the U.S.,” he answers. “They make these things but have no way to recycle them.”
Appropriately, Zeng’s phone buzzes with Homer’s number. “Maybe he has some new prices for me. Let’s see.”
Excerpted from Junkyard Planet: Travels in the Billion-Dollar Trash Trade, to be published in November 2013 by Bloomsbury Publishing.