Skip to main content

Cash flow a ‘widespread concern’ as business picks up

China is steadily opening up its markets and recycling companies are achieving operating rates of between 30% and 70%, reports the Bureau of International Recycling in its latest global markets update.  

The border with Russia remains closed but no interruptions have been reported in shipments of recycled materials, says BIR. In Hong Kong, some scrap operations are closed but most recycling businesses are in operation. Even so, scrap generation has been perhaps 30-40% below normal levels. Imports and exports via all shipping lines are normal and without restriction.

In Taiwan, too, no new cases of Covid-19 have been noted for three weeks and the country appears to be functioning quite well. Scrap processors are in operation but business levels are down by 30-40%. In contrast, many travel and entertainment-related businesses are facing closure.

14 days quarantine

Many Malaysians commute daily to Singapore to work in its yards and in other industries. The first phase of Singapore’s ‘safe reopening’ will begin on 2 June, with Malaysia extending its movement and business curbs until 9 June. Any Malaysian worker entering Singapore must quarantine themselves for 14 days at a government facility – a requirement that not many workers are willing to meet.

In the meantime, generation of scrap is described as minimal. All eyes are on this first phase of re-opening as its effectiveness will dictate the timing of the second phase and beyond. Amid substantial if cautious optimism, there is also plenty of interest in what happens in Japan where the state of emergency in Tokyo and four other remaining areas was lifted on 25 May.

No payments, delays

A markedly different situation in India is described as ‘very critical’ as relaxation of lockdown restrictions has led to an increase in Covid-19 cases. Although a significant proportion of businesses have resumed, sales and cash flow remain major issues.

Many operators are said to be depending on payment for exports because no cash is being received from local industry. Importers continue to suffer a heavy demurrage and detention burden with reports that some shipping lines are taking almost a week for delivery but then approaching customers for the detention costs.

In Europe, Germany is showing much more confidence with regard to the Covid-19 situation; the state of Thuringia, for example, has announced that it will end both the obligatory wearing of face coverings and the limit on how many people can gather together within two weeks.

Many insurance and investment companies, as well as other service-orientated businesses, have observed during the pandemic that it has been possible to work almost as productively from home as from an office. Real estate companies are now expecting lower demand for office space over the coming years as companies reduce costs by letting people work from home.

Battered car industry

The automotive industry, a key sector of the German economy, has resumed production of passenger cars but at a low level, not only because companies do not want to risk the health of their workers but also because they realise demand for new vehicles will not be as high as before the pandemic.

Germany is experiencing its largest decline in output since the crisis in 2008, and the country’s GDP fell 2.3% in the first quarter of 2020.

After almost two months of lockdown in France, economic life has been resuming step by step since 11 May while respecting health protection requirements. Further reopening measures are expected in the coming days. The country’s central bank estimates that GDP fell 6% in the first three months of the year – the French economy’s worst quarterly performance since 1945.

Industry is gradually recovering and is now running at 60% of capacity but the fear is that bankruptcies will lead to many job losses. The short-term outlook is bleak and the uncertainty is total.France’s automotive market slumped 88% in April.

Dealerships and factories have reopened but the stock of unsold cars is piling up and this flagship French industry will struggle to survive without significant government support.

Scrap supplies shrink

In the recycling sector, ferrous scrap supplies are 60 to 70% of the levels seen before sites were closed. Retail purchases and demolition scrap are said to be at good levels but there is a lack of new industrial scrap. Incoming volumes of non-ferrous scrap are healthy, with satisfactory sales recorded for copper but not, inevitably, for aluminium.

The situation in the UK is improving slightly. Lockdown restrictions have been loosened and people whose jobs can be performed while adhering to social distancing guidelines are being encouraged to return to work. ‘Non-essential’ shops are due to reopen in England on 15 June as long as certain guidelines are met. Recycling yards are gradually reopening but volumes are still down.

In the Middle East, recycling businesses will generally resume in June but restrictions will prevent a rapid build-up of momentum; some considerable time may be needed, it is argued, for volumes to return to viable levels. Some yards will opt to remain closed in the face of very high operating costs and impracticably low inflows of material.

Saudi Arabia has confirmed that its curfew will be lifted on 21 June with business reopening gradually but amid restrictions. A staged reopening will also apply to Kuwait after mid-June. The lockdown has ended in Lebanon but restrictions on movements remain very tight.

No construction, no scrap

In the UAE, the process of easing restrictions began on 24 April and a further relaxation was introduced on 27 May. Almost all commercial and private sector activities have been allowed to resume with 30% of their staff, provided that precautions such as social distancing and the wearing of masks are observed at all times.

Almost all scrap yards are open but are operating at lower capacities because manufacturing, construction and demolition activity is substantially below pre-Covid-19 levels, negatively affecting availability of material. Scrap arisings are well down and volumes across the country are, on average, at around 30% of the norm.

It is thought that the latest easing of restrictions may boost availability. By declaring waste management to be an essential service, the UAE government has facilitated the movement of municipal scrap.

As reported earlier, the UAE government imposed a four-month restriction on exports of ferrous scrap and recovered paper with effect from 15 May . Domestic mills are foreseeing a reduction in local scrap prices.Hopes are expressed in the UAE that a gradual relaxation of the lockdown in India may help in freeing containers from congested ports as well as in improving cash flow.

Would you like to share any interesting developments or article ideas with us? Don't hesitate to contact us.

You might find this interesting too

Tennessee invests further in tyre recycling scheme
Entrepreneur wants to put Canada’s old fleet to rest

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Subscribe now and get a full year for just €169 (normal rate is €225) Subscribe