Recyclers who have learned to cope with running businesses during the coronavirus pandemic are now trying to assess how markets for secondary materials will develop in a post-virus world. This challenge was a key theme of a special webinar on global trade organised by the Bureau of International Recycling for its membership on 2 June.
The Chinese influence, consumer spending and protectionism were among the issues considered by contributors with responsibility across a range of materials and geography.
Tom Bird, BIR president, said demand had generally been holding up but supply chains had been affected by national shutdowns. He said the next stage was a critical time. ‘Consumer spending is down but, coming out of a crisis, cash flow is vitally important when businesses have to start buying volumes again.’
Bird also anticipated countries de-coupling their economies from the magnetic effect of China’s decades of substantial growth, calling it ‘a very interesting period’. ‘How do economies change from an over-reliance on China?’ he asked.
Joost van Kleef, whose company Oryx Stainless has operations in Europe and Asia, agreed with suggestions of regional fragmentation, whereby supply chains could become less global with Asian materials and products staying in Asia and similarly for Europe. Van Kleef, who also chairs BIR’s stainless steel and special alloys committee, said the trend was already happening to an extent and he thought it could become more so.
Tighter restrictions imposed by Beijing on secondary materials has meant far less scrap being imported. Higher quality thresholds mean that imported secondary materials are increasingly only being accepted as ‘recycled products’ after processing elsewhere, usually in neighbouring states.
David Chiao, president of the Uni-All Group based in Atlanta, USA, said China may no longer be the main marketplace for scrap but it was still a big consumer of metals and would remain a key player with other countries processing scrap for its domestic producers. He said Japan had developed and changed its economy in a similar way.
Mark Sellier of Global Metals Network suggested that growing unemployment in China because of the slowdown in its economy would also affect the situation as the country sought to boost growth. He pointed out that nine million young people, mostly graduates, were about to enter the Chinese job market at a time of shrinking opportunities. ‘It’s going to be very, very, very interesting,’ he said.
Chiao referred to a recent announcement from Beijing of a US$ 6 billion (EUR 540 billion) stimulus package, similar to an initiative after the 2008 crash which had benefitted scrap traders. But this time, he said, the emphasis was more on the provision of better broadband and digital technologies rather than infrastructure such as roads that require large quantities of scrap. This trend followed the course taken in Japan in the 1960-70s and Taiwan in the 1980-90s, he argued.
Protectionism on rise?
The discussion concluded with the possibility of individual countries increasingly protecting important materials by denying free trade, as Russia proposed a year ago when it sought to add ferrous and non-ferrous scrap to a list of goods deemed ‘essential for the Russian domestic market’.
Bird said there might well be attempts by individual countries to do the same but such moves that would be challenged by BIR. ‘There will be certain battles,’ he said, ‘But it won’t happen across the board.’
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