Non-ferrous markets have been transformed in recent weeks with metal prices down 10-30% and they remain vulnerable to the high levels of volatility, according to the Bureau of International Recycling (BIR).
‘With global headlines dominated by bad news, metals markets are deemed unlikely to receive an injection of confidence and stability in the near term, especially as holiday periods are now curtailing business activity levels in many parts of the world,’ says the organisation’s latest World Mirror. ‘Markets that had looked strong and resilient as recently as April this year have become decidedly fragile in June and July.’
BIR says markets challenges include: high inflation and interest rate rises; China’s indebted housing sector; uncertainty over gas supplies to Europe during the Ukraine conflict; a growing labour market crisis; transportation difficulties; and the strength of the US dollar.
‘One of the most key recent developments was the US Federal Reserve’s largest hike in its benchmark interest rate in approaching 28 years, with the ongoing fight against inflation expected to bring further increases,’ the Mirror adds. ‘The Fed’s policy and the strength of the US dollar have had a dampening effect on demand for metals.’
The squeeze on energy supplies is having a major impact on German industry. BIR points out that smelters without long-term energy supply contracts are facing difficult times and it warns that smaller operators could go out of business.
In Ukraine, street collections of brass are reportedly only a fifth of pre-conflict volumes. While domestic copper collections are covering internal demand, exports and imports are said to be non-existent. Meanwhile, scrap suppliers in Russia are carrying stock purchased which they are not ready to move at current market prices because of a lack of hedging.
Among more positive news reported is the expectation that India’s GDP will grow by at least 7% this year while China has announced plans to increase ferrous scrap consumption to 320 million tonnes by 2025, along with a goal of 20 million tonnes of recycled non-ferrous metals in the next five years. Copper scrap imports were 158 000 tonnes in May, up 16.9% month-on-month and 13.5% year-on-year.
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