US-Iran conflict drives non-ferrous trading re-think in the region

Non-ferrous scrap traders in the Middle East are likely to focus more on local processing and supply security in the wake of the USA-Iran conflict, according to an expert on regional markets.

Rami Shahrour, of Sharmetal Trading in Lebanon, says ‘Recent logistics issues have underlined the risk of depending too heavily on imported raw materials or on export routes through sensitive shipping areas.’

Uncertainty

Writing in the latest BIR Mirror, non-ferrous metals board member Shahrour points out the importance of the gridlocked Strait of Hormuz as a route for oil and cargo movements. He says high oil prices caused by the blockade and regional tensions are also increasing costs in the non-ferrous sector. Fuel price hikes raise the cost of trucking, port handling, container movements and sea freight.

‘Any disruption quickly creates concerns within the market. Some vessels have faced delays, higher levels of risk or changes to routes, all of which has led to uncertainty for exporters, importers, scrap traders, smelters and factories across the region.’

Cautious sellers

The logistics situation has had a direct effect on non-ferrous metals, he adds, because aluminium, copper, brass, lead, zinc and cable scrap all depend on smooth movement between yards, ports, smelters and end users.

‘With higher risks to Gulf shipping routes, traders are seeing longer delivery times, higher freight/insurance costs and more difficulties in arranging shipments. These conditions have made some sellers more cautious, while buyers are trying to secure material earlier to avoid delays or shortages.’

Shahrour concludes: ‘As a result, regional smelters, recyclers and industrial buyers are expected to attach more importance to local scrap collection, domestic processing and keeping enough stock available. This also supports the long-term direction of the UAE, Saudi Arabia and other Gulf Cooperation Council countries where recycling and local metal-processing projects are continuing to grow.’