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No escape for recyclers from measures to halt pandemic

The global recycling market continues to be beset by the necessary measures taken worldwide to contain Covid-19, which include widespread border closures and restrictions on entry and travel.

In its latest review of the situation, the Bureau of International Recycling (BIR) says supply-side issues and disruption to global value chains are posing production problems around the world, leading to shifts in patterns of demand and reduced productivity.

In Europe, BIR notes that many countries are seeing rising infection levels. Recent responses include tougher restrictions imposed in the UK. This week, the government announced details of a new jobs support scheme that will replace the furlough initiative when it ends on 31 October. Even so, redundancies are being reported across all industries including the recycling sector, which is still seeing lower volumes on a year-on-year basis.

French scrap collection volumes were excellent in the weeks following lockdown, supported by higher prices, but there is currently a lack of material. BIR expects it to take ‘months and probably years’ for key industries such as automotive and aerospace to return to full capacity.

In Germany, 533 000 fewer cars were registered by May 2020 than in the same period last year, with April proving to be the weakest sales month in 38 years, although there is hope of the situation returning to normal in the fourth quarter.

Meanwhile, incoming orders for Germany’s mechanical and plant engineering sector fell by 16% in real terms in the first seven months of 2020 while production was 14% down on last year’s values in real terms, thereby impacting scrap arisings.

In Hong Kong, strict social-distancing measures slowed activity levels throughout most of the third quarter and badly disrupting the supply of materials. It is hoped that an easing of restrictions in late August will enable the metals recycling industry to return to normality in the fourth quarter. Copper demand in China is not reflecting the exuberance of offshore commodity futures.

India’s slow recovery

BIR notes that India’s metals sector has suffered a significant blow from operational difficulties and poor demand resulting from Covid-19. ‘Only a slow recovery to pre-pandemic level of production is expected in the coming quarters, with rising infection numbers thought likely to fuel a decline in domestic consumption.’

Secondary metal prices recovered by between 5% and 12% during August and the first half of September.

Meanwhile, the government has rolled out a large stimulus package and policy changes such as fast-track investment clearances, incentive schemes, land banks and the adoption of more liberalised environmental clearance norms have been designed to attract investors.

India’s domestic secondary metals industry is keenly awaiting details of a new end-of-life vehicle policy, which will apply to all vehicles. This could help India to emerge as a hub for car manufacturing with steel, aluminium and plastic being recycled.

Also expected is an announcement of further infrastructure spending which would boost demand for secondary metals and for ferrous and non-ferrous scrap imports.

UAE upturn

In the Middle East, lower oil prices this year have applied the brake to construction and infrastructure investment programmes, causing a decline in the demand for metals and the generation of scrap. In the UAE, scrap operators have experienced an upturn in activity levels after a particularly slow second quarter but a shortage of scrap remains a key issue for most buyers.

From 15 May, the government implemented a four-month ban on exports of all ferrous scrap in a bid to ensure sufficient feedstock for domestic steelmakers to maintain their operations. This ban has now been extended for a further four months. Demand from local mills is stable and prices are showing positive signs. On the downside, however, banks are looking to minimise losses by cutting lending to the scrap industrie

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