Dry bulk switch unlikely to benefit scrap trade

Exporters of scrap looking to move their materials in dry bulk ships instead of containers are finding it difficult to cut costs, according to an export in commodity markets.

Peter Sainsbury, former lead economist at the UK sustainability charity WRAP and now head of Materials Risk, a commodity market intelligence and advisory firm (www.materials-risk.com), says commercial conditions continue to be challenging because of Covid-19 and other factors.

Exporters of scrap have faced huge hikes in rates and face competition for containers. Scrap is both bulky and often of lower value than other commodities. Some traders have reported shipping lines returning containers to the Far East empty rather than wait for them to be filled with lower-value scrap.

‘Commodities such as scrap metal are increasingly being transported via dry bulk ships,’ Sainsbury told Recycling International. ‘However, the dry bulk market is enjoying its own boom as iron ore, coal and grain producers look to take advantage of a rebound in demand, divided supply chains and Covid-19 induced congestion. ‘A record low ship order book is also likely to mean scrap metal shippers will continue to face commercially challenging transport conditions.’

The Baltic Dry Index, which factors in rates for shipping vessels, hit an 11-year high at the start of September which has been attributed to a return to higher demand coupled with shipping constraints, especially in China. Although the costs are high, Yahoo Finance notes that the Baltic Dry Index’s all-time record on 20 May 2008 (during the world banking crisis) was approximately triple the current level.