Page 82 from: Recycling International July issue | 2022 + TOP 100!
MARKET ANALYSIS
Prices cool as
economies weaken
Increasing uncertainty amid soaring energy
costs and rising inflation rates dampen inves-
tors’ enthusiasm.
to nearly 148 000 tonnes. However,
shipments to Malaysia are down 26%
to around 108 000 tonnes. Mainland
China, once the main overseas market
for US recycled aluminium, has
dropped to 14th spot. In dollar terms,
exports are up 27% to more than
US$1.4 billion on the back of this
year’s higher commodity prices.
MINE GROWTH
The International Copper Study Group
(ICSG) expects world copper mine
production to grow 5% both this year
and next after three years of stagna-
tion. It notes that Covid-19 restrictions
and workforce absenteeism have con-
tinued to constrain mine output in
2022.
‘However, world mine production this
year is expected to benefit from addi-
tional output from new and expanded
mines as well as an improvement in
the general situation regarding the
pandemic,’ according to the newly
82
high costs and are ordering more cau-
tiously than before. In short: planning
is difficult and market participants act
extremely warily. The crisis is currently
having a concrete impact on metal
prices. In recent months, aluminium,
copper and nickel had all achieved
record prices on the London Metal
Exchange but the trend seems to
be over, at least for now. LME prices
have been falling for the past few
weeks and scrap prices are following
the trend.
INVESTORS WARY
Another reason for falling metal pric-
es, according to analysts, is that finan-
cial investors have turned their backs
on non-ferrous metals. They believe
the policy of the European Central
Bank in the context of sharply rising
inflation in the euro zone has shifted
the focus of financial investors
towards other forms of investment. As
an example, the Financial Times
reported in late June that copper was
down over concerns that ‘demand will
be crimped by central banks rapidly
raising interest rates to curb inflation
and by China’s tough Covid-19 lock-
down policies’.
S&P Global, meanwhile, noted in May
that global aluminium users signalled
renewed weaknesses in the health of
the sector. A further sharp fall in out-
put was coupled with the steepest
reduction in new order inflows since
May 2020. This pushed the headline
PMI below the neutral 50.0 mark for
the first time in four months and to
the lowest level for two years.
‘Regional data signalled slower
improvements in operating conditions
at both US- and Europe-based
aluminium users, while firms in Asia
signalled the sharpest deterioration in
conditions since the initial onset of
the pandemic in February 2020,’ it
said.
US VOLATILITY
In the US, a Producer Price Indexes
report from the Bureau of Labor
Statistics indicated that May’s PPI
changes showed volatility across
recycled commodities. Most recycla-
ble materials were down for the
month but up for the 12 months
ending in May with recyclable
aluminium increasing 24.1% year-on-
year. Aluminium, copper, iron and
steel, and nonferrous all peaked in
April 2022 but turned down in May
2022.
Amid rising demand from India, South
Korea, Mexico, and Canada, US
exports of recycled aluminium
increased 1.7% year-on-year during
Jan-Apr 2022 to more than 665 000
tonnes.
India has become the top overseas
market for US recycled aluminium,
with shipments up 33% so far this year
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Metal markets have been increasingly
characterised by uncertainty in recent
weeks. The consequences of the coro-
navirus pandemic and the resulting
problems in the global supply chain
are one reason, as well as the continu-
ing Russian attacks on Ukraine. New
pressures are being imposed by high-
er energy costs and inflation which are
cooling markets.
The metal industry is primarily affected
by the sharp rise in energy prices and
there are two key problems. On the
one hand, the metal works and smelt-
ing plants depend on energy for pro-
duction. When energy prices rise
sharply, metal production becomes
uneconomical because Europe is no
longer competitive. On the other hand,
buyers of the metals such as the auto-
motive industry, are also affected by
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