BIR Non Ferrous Mirror October

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

After a prolonged run of high prices, the non-ferrous metals markets have collapsed at a speed that has surprised even some of the most seasoned industry professionals. For example, by mid-October, the LME copper quotation had plummeted more than 45% from its record high posted on July 3. BIR | The following article is based on the latest Non-Ferrous World Mirror produced by the BIR world recycling body for the benefit of its members.

After a prolonged run of high prices, the non-ferrous metals markets have collapsed at a speed that has surprised even some of the most seasoned industry professionals. For example, by mid-October, the LME copper quotation had plummeted more than 45% from its record high posted on July 3.
’The main issue right now is to find consumers who are buying, receiving and paying their bills on time – credit is on everybody’s mind,’€™ according to one industry expert. Another highlighted how the financial turmoil has generated ‘€˜uncertainty surrounding the stability and reliability of trading partners’€™.
With prices tumbling, some buyers have been demanding price discounts from exporters. Elsewhere, deposits paid on shipments only a few weeks ago have been surrendered as many buyers look to walk away from contracts. Other buyers have had their credit facilities reduced such that they can no longer afford to pay for scrap already on the water.
There are widespread reports of defaults on the part of scrap buyers, most notably in China and India. In the latter, free-falling metal prices and the rising value of the US dollar against the rupee are hurting the country’€™s importers and demand for all metals has almost vanished. Nevertheless, the country is still expected to post an annual growth rate of around 8%.
Many scrap exporters have been left to chase payment or to carry the cost burden of shipping cargoes back to their point of origin. In the Middle East, non-ferrous exporters have called a first-ever meeting to discuss these contractual defaults. Meanwhile, the volumes of scrap flowing into processors’€™ yards in the region are more than 50% below the average, with small-scale suppliers preferring to hold on to material while prices are at this significantly lower level.
In South Africa, one of the country’€™s largest merchants stopped buying non-ferrous scrap for three days while many others have slashed purchasing prices. There are rumours that the summer shutdowns could be implemented up to a month ahead of the normal schedule as the commodity-based economy is reportedly ‘€˜staring recession in the face’€™.
Meanwhile, the weakness of the Rand in relation to the US dollar has helped exporters with some of their expensive stock.
Several larger merchants in Australia and New Zealand have confirmed that they will not be buying non-ferrous scrap from smaller dealers until further notice and some consumers are declining to purchase material until greater stability returns to the marketplace.
In the USA, many secondary aluminium consumers have been delaying or cancelling shipments. Meanwhile, their copper counterparts are buying scrap but are adopting a zero-tolerance approach to even the smallest over-shipments. Stainless scrap is fetching highly unattractive prices while media plants are able to buy more than they can handle – although flows are expected to dwindle as shredder production drops sharply from its record levels of earlier this year.
In Europe, a similarly gloomy picture is emerging. Leading consumers are declining to build stock, not least because they expect tomorrow’€™s prices to be lower than today’€™s. Thus, scrap dealers are faced with stock depreciating in value in their warehouses. Despite the ample availability of raw material at cheaper prices, demand is sluggish because refiners are facing order reductions and postponements of their own.
In Italy, there is little competition for the large volumes of brass scrap available while demand for aluminium scrap is described as ‘€˜dead’€™ among leading consumers owing to the crises afflicting the building and automotive industries. Demand for stainless steel scrap and nickel alloys is said to have dropped 20% in recent months.
In the UK, discounts have widened and production cutbacks have been announced by producers of brass rod, copper cable and copper powder. With many buyers having satisfied their non-ferrous scrap needs for the coming months, domestic traders have slashed their prices – with export-oriented brass the worst affected. Aluminium scrap is being traded almost on a ‘€˜one-price-fits-all’€™ basis; ingot buyers are fielding virtually no new enquiries for the fourth quarter and the weaker smelters are expected to struggle to survive. Stainless steel prices have fallen owing to lower nickel and ferro-chrome values on top of recessionary worries.
Even in the Nordic Countries , where robust growth rates were being discussed until relatively recently, all economic performance indicators have been revised downwards. While industrial production is set to remain stable for the remainder of the year, new orders are on the decline and so capacity utilisation rates can be expected to fall at some future point.
To add to this general uncertainty, Russia is expected to come forward by November 1 with a draft proposal to implement even higher – but as yet unspecified – export duties on ferrous and non-ferrous scrap.