Non-ferrous market: expectations dampened

With metalworking industries in Europe quiet during the summer and China’s economy slowing, the markets for scrap are subdued. But the shift to e-mobility continues to offer a brighter future.

Trade in non-ferrous scrap was slow this summer. During the last few days of August, however, prices on the London Metal Exchange have become firmer again.

Overall, prices moved within a narrow range for weeks with no visible permanent trend in one direction or the other. Since the metalworking industry in Europe is currently on weaker ground, demand within Europe is limited. The supply of recycled scrap is also limited with the industry producing less.

The current situation in the metal and electrical industries is just one example of that in the metalworking industry. In August, a sector-specific economic climate index for the sector fell to its lowest level since June 2020. Companies were assessing both their current situation and expectations more negatively than in recent years.

The order backlog is rated at its most negative since the peak of the Covid crisis. Industrial companies’ production plans continued to decline in the summer and indicate lower production still for the third quarter.

E-MOBILITY

Increasingly, the non-ferrous world is mindful of China’s economic state and in particular the market for electric vehicles (EVs) and batteries. But while the economic picture in China is weaker, Chinese production of new energy vehicles rose 31.9% year-on-year in May, according to the latest data from the China Association of Automobile Manufacturers.

The number of units manufactured increased from 712 660 in May 2023 to 940 000 in May 2024. China uses the term NEV to designate vehicles that are fully or predominantly powered by electric energy. This includes plug-in, hybrid and fuel cell as well as the conventional batteries.

IMPORT REVISIONS

Dong, a member of BIR’s non-ferrous board, says aluminium consumption by the automotive sector is expected to increase, mainly because NEVs demand lighter body weights. NEV manufacturers are expected to consume an estimated 10 million tonnes of aluminium annually by 2030.

He adds: ‘Proposed revisions affecting China’s recycled raw material imports, including for copper, brass and aluminium, are at the final stage of drafting whereby suggested new categories will be added to the current policy. The revision is pending approval.

INDIAN GROWTH

Fellow board member Anirudha Agrawal says India’s growth momentum remains resilient because of retail spending, private capital expenditure and government investment in infrastructure. He adds that government has mandated conformity to the Bureau of Indian Standards for stainless steel and aluminium utensils.

Meanwhile, Agrawal adds, increased shipping costs into India have been driving up aluminium scrap prices, thereby negatively affecting recyclers’ margins. However, there is no shortage of scrap.

Another board member, Stella Ying Wang, reports that China’s stringent scrutiny of ‘Certificates of Origin’ and export qualifications relating to aluminium ingots has compelled Malaysia to ensure compliance and transparency.

The measures require comprehensive documentation, including proof of manufacturing locations, production processes and material sources, to verify the origin and standards of Malaysian aluminium ingots.

COPPER

Copper has shown a clear downward trend at times in recent weeks, with LME prices below the US$ 9 000 per tonne mark. Recently, however, the red metal has recovered well with LME prices around US$ 270. Stocks in LME warehouses stood at 314 250 tonnes.

Read the full non-ferrous market analysis in our upcoming issue >>