Economic support from governments during the coronavirus pandemic and the effect on prices for ferrous scrap will have a lasting impact on the recycling industry, according to a leading expert on the sector.
The analysis from Greg Schnitzer, president of BIR’s ferrous division, comes in the world recycling organisation’s latest quarterly assessment of trade and markets. Schnitzer, who is also vice-president of global trade for Sims Metal Management, says the global ferrous scrap industry is ‘essential’ because recycling completes ‘an everlasting cycle’.
‘Huge amounts of stimulus have been pumped into every economy one way or another and this has had a profound effect on our industry, with demand increasing and prices soaring to over US$ 500 per tonne,’ says Schnitzer in the BIR Mirror. ‘I can’t predict pricing, nor will I attempt to, but the overall flow of money should have a lasting impact on our industry.’
But he acknowledges it will be some time before normal business is resumed, even with widespread vaccination. ‘We still need to be vigilant. We still need to fight for our industry and the benefits we provide to the world.’
The US view
Also in the Mirror, George Adams from SA Recycling (USA) reports on ‘one of the strongest recoveries’ in the US in the three months through to January this year.
‘Two main factors have been driving demand,’ he says. ‘Firstly, the interruption of the supply chain last spring, the depletion of inventories and the reduced capacity to produce the raw materials to refill them. Secondly, the change in consumer behaviour that has created strong demand for products that are metals-intensive such as freezers – sales of which are up 50% in these times of a more stay-at-home culture.’
The US economy, in his view, has been effectively reset and is now the driver of demand and healthy steel prices in the USA and abroad.
‘With their demand still strong, US mills have concerns about scrap availability in March. Add in the fact that China is now actively seeking imported ferrous scrap (after the ban was lifted on 1 January this year) and scrap dealers are optimistic about the market in coming months.
While new steel prices in the USA will start to come down later in the year, driven by increased US mill capacity and rising imports of new steel, demand should continue to support a healthy US ferrous scrap market.’
Zain Nathani, of the Nathani Group and vice-president of the division, reports on the cut in India’s import duty on ferrous scrap to 0%, effective until 31 March.
‘This encouraging move will benefit the hundreds of domestic secondary steel manufacturers who rely on imported scrap as a vital raw material,’ he says. ‘The long-awaited vehicle scrappage policy has been formally announced under the Union Budget and will be part of the government’s “Self-Reliant India” campaign. This will promote domestic car dismantling and shredding.’
Nathani adds that regular scrap buyers in South Asia were taken aback by the sharp increase in ferrous scrap prices into the new year. ‘With the markets having settled down and scrap prices having reduced since then, normal buying activity is expected to resume. The market seems to have found its level but an uptick in prices cannot be ruled out after Chinese New Year,’ he adds.
UK bounces back
Fellow BIR board member Shane Mellor, from Mellor Metals in the UK, believes the UK economy will demonstrate ‘a steady but bullish bounce-back’.
‘Overall, it has been the most thought-provoking period in terms of both demand and pricing that has been seen for a number of years, with erratic swings seen in the global markets,’ Mellor says, noting that indexes climbed strongly through December and into early January. However, these sharp price rises were short-lived.
‘The situation was further exacerbated by sharp increases in freight costs and container availability issues, which inevitably caused logistical problems. Most container buyers were seemingly inactive as the situation in the box market became almost untenable and sales into bulk deep-sea facilities became the preferred option for many UK sellers.’
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