BIR Non-Ferrous World Mirror March 2016

Global – Labour costs have increased ‘€˜very rapidly’€™ in China and some lower-end projects have moved to other developing countries in the region with wage and logistics advantages as well as lower environmental standards, according to Ma Hongchang, BIR’€™s advisor on local policy and regulatory developments. ‘€˜Some capacity has already been transferred there,’€™ he points out.

Labour costs have increased ‘very rapidly’ in China and some lower-end projects have moved to other developing countries in the region with wage and logistics advantages as well as lower environmental standards, according to Ma Hongchang, BIR’s advisor on local policy and regulatory developments. ‘Some capacity has already been transferred there,’ he points out.

In 2015, China imported 3.658 million tons of scrap copper, 2.087 million tons of scrap aluminium and 21 700 tons of scrap zinc. More recently, many Chinese scrap traders and processors have been encouraged by the commodity price rebound and copper imports soared 50% year on year in February to 420 000 tonnes.

Dubbed ‘unexpected’ in some quarters, this improvement in LME copper and aluminium values helped to trade some of the ‘frozen’ tonnages which had remained unsold owing to high average prices in the yard, according to feedback from Germany. But with ferrous prices having been relatively low until recently, smaller merchants have been insufficiently active in collecting not only ferrous but also non-ferrous metals, it is argued. Processing companies with flotation systems or shredders are said to be ‘complaining about availability of material’.

 Elsewhere in Europe, the scrap market in France has become increasingly difficult because the Far East is not very active and European customers are upping discounts. With little material to sell and margins described as thin, ‘no-one wants to take any risks’. Many French scrap dealers sold a portion of their inventory following the recent LME increase but have now reverted to awaiting further developments. With scrap volumes also lower in the UK, conversations with many merchants are focusing less on daily trading activities than on cost-cutting. In the Benelux Countries, business is said to be doing no more than ‘ticking along’. The mild winter failed to generate large volumes of scrap – especially on the lead battery side – and the relatively low steel scrap prices until recently have continued to stem non-ferrous flows into yards.

Non-ferrous scrap trading in the Nordic Countries, meanwhile, has been ‘relatively good’ in recent weeks. ‘The market appears to have accepted current price levels and materials are now flowing a little more easily than in previous months,’ it is ventured.

In Russia, rumours suggest the government is considering placement of restrictions on the points from where scrap can be exported; however, it is emphasised that, for the moment at least, these are just rumours. In its budget for 2016/17, the government of India has reduced brass scrap import duties from 5% to 2.5%. As regards daily business, the country’s non-ferrous trade is generally busy and production is running almost at full capacity, although the operating margins for recyclers/secondary producers are said to be in need of ‘massive improvement’.

Physical copper scrap is labelled ‘tight’ in the USA. Secondary aluminium ingot prices have increased by US$ 20-40 per tonne and aluminium scrap values have also headed higher. South into Mexico, the market appears to have achieved a kind of balance between limited scrap availability owing to depressed steel and non-ferrous prices and a robust demand dampened by scrap imports from the USA and abundant primary aluminium imports. ‘Some scrap grades such as UBC are even managing to find their way in part to the US mills as they did before,’ it is noted.

Higher LME prices have boosted activity in the non-ferrous markets of the Middle East, with increased volumes of scrap having been exported from the region in this year’s first quarter. In South Africa, conversely, business remains slow amid a shortage of suitable raw material for the foundries.

The following article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.