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Non-ferrous market may recover if ‘blunt’ tariff axe is put away

Aluminium prices are predicted to be between US$ 1 910 and US$ 2 380 per tonne next year while copper will be around US$ 5 600-7 200 per tonne – but only if the global trade war sees some kind of truce, Edward Meier told the non-ferrous division gathering of the Bureau of International Recycling (BIR). 

‘Many metals are not perceived as tight as earlier in the year,’ the Commodity Research Group analyst told delegates in London, noting that interest rates in key recycling markets, notably the US, were being raised ‘aggressively’.

Shuffle in exports

Meier said China’s trade was now at 18% of GDP, down from 35% back in 2006. Chinese exports to the US will exceed US$ 500 billion this year, while it imports materials and products from the US worth around US$ 130 billion.

China imported 2.17 million tonnes of aluminium scrap in 2017. During the months April, May and June this year, figures show a decline of 40% over the same period last year (averaging 115 000 tonnes per month).

Mexico, on the other hand, saw record imports of aluminium from the US, said Alejandro Jaramillo of Glorem SC. ‘US exports to Mexico are running about 20% higher than last year,’ he reported. Demand for Mexican copper and brass scrap is also ‘robust’ now that Chinese buyers are eager to find a tariff-free replacement market.

‘A blunt instrument’

‘Politics are getting increasingly polarised,’ Meier said, hinting at the tense relationship between the US and China since president Trump issued a 10% import tariff on non-ferrous metals. ‘Based on the persisting toxic climate, the trade war isn’t going away. Although it’s clear to see that tariffs are a very blunt instrument.’

As Meier put it, China ‘has bullets to hit back with’: it can raise export taxes, slow down customs clearances, conduct more inspections, reduce foreign investments, or even cut back on its purchase of US debt. ‘Tariffs will undoubtedly create more problems than they will solve,’ Meier declared.

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