A sober forecast of an even more challenging second half of 2020 has been delivered to the non-ferrous sector by a leading economist. Eugen Weinberg, senior commodity analyst at Commerzbank, told an online discussion presented by BIR that recyclers were ‘in the middle of a hurricane’.
Weinberg was the key speaker for the world recycling organisation’s focus on the post-COVID-19 macro economy and the impact on non-ferrous metals on 3 June.
He said the situation looked ‘OK’ if judged on the performance of copper and other metals and he judged the sector was currently down 15% because of the pandemic. But he warned that did not reflect the real situation because Q1 data included pre-Covid-19 trading.
Weinberg argued this was misleading and it would only be in July or August that ‘the full negativity’ would be clear with Q2 data. ‘You are in the middle of a hurricane,’ he said.
He anticipated a rougher return than the 2008 financial crash. ‘We are up for a big disappointment,’ he told the forum. ‘We must prepare for more insecurity and surprises. Be prepared for your trading partners to fail.’
Weinberg’s contention was that problems with globalisation had been building up for decades. In 1947, he said, worldwide trade accounted for 10% of global GDP. By 2010 it was 60% and the proportion was rising, although more slowly. ‘The current crisis will have a long-lasting effect. It brought forward negative trends from the last 10 years.’
He warned that trading relationships had been broken by the pandemic ‘and I don’t see them returning’. He was also concerned there was no overall resolution of the trade war between USA or China and thought a recovery would be more of a ‘hockey stick’ than the ‘v’ shape generally hoped for.
‘Everything seems contained at the moment but we have not yet come to know how bad it will be. We are only in the first half of the crisis – I hope I am wrong and you will prove I am just the bad cop.’ But he had one upbeat message: ‘People learn more from mistakes than victories.’
Other contributors to the discussion included Murat Byram from EMR who spoke in front of a poster saying ‘Recycling is not an option, it is a must’. He noted that not all EU member states had designated recycling as an ‘essential’ activity and added the markets were already under pressure before the coronavirus crisis.
Dhawal Shah from Metco Marketing, reviewing the Indian situation, noted that the country’s GDP was down 25-40% in Q1 and he said there was a long way to go before recovery. For the first time since independence in 1947 the country had recorded zero car sales in April and they were 80% down in May. ‘When it rains, it pours,’ he added.
Shen Dong from the Omnisource Corporation in the US said China’s role at the centre of global supply chains had been disrupted by the pandemic. He also noted the official change from July when ‘scrap’ brass, copper or aluminium imports must have very low contamination levels to be classified as ‘recycled products’.
Imports of any scrap would be banned from the end of the year. He pointed out there had not yet been any formal information in English from the Chinese authorities on the change or how it would affect the current inspection regime involving CCIC. But he felt the outlook for scrap exports to other processing countries in the region was healthy because of growing demand from a recovering China.
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