BIR Non-Ferrous Metals World Mirror June 2013

Global – The following article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.

As if market conditions alone were not taxing enough for the non-ferrous scrap sector, severe challenges are coming from various other directions. In South Africa, for example, restrictions on scrap metal exports appear inevitable although nothing has been finalised as yet.

However, the country’s Metal Recycling Association is promising to take legal action against the government if a directive to curb ferrous and non-ferrous scrap exports is enforced.

Meanwhile, domestic demand for non-ferrous scrap is said to be 30-50% lower than a few months ago because of slow sales conditions for consumers.

Already faced with an increase in the basic customs duty on aluminium scrap, the non-ferrous scrap sector in India is also confronted with the challenge of the rupee losing around 12% of its value over the last three months. Add in the weaker LME and the cumulative effect on scrap prices ‘could be anywhere between 15 to 20%’, it is claimed. Meanwhile, the temporary shutdown at one of India’s primary copper smelters is said to have undermined purchases of red metal scrap.

Also on the theme of currency, the appreciation of the yen and the downturn on the LME conspired to create a softening of aluminium scrap prices in Japan in the second half of June. Nevertheless, supply is still tight because of reduced generation and exports to South Korea among others.

The headline-maker in Brazil has been the largest protests in the country’s history but, on a more positive note, new rules regarding VAT on aluminium scrap moved to São Paulo state are being hailed as ‘an important step towards ending tax fraud’.

For many countries around the world, another major concern is the economic outlook in China, where the People’s Bank is tightening up on its lending. China’s scrap copper imports in January-May this year were 6.9% lower than in the same period of 2012 while incoming volumes of aluminium scrap dropped 7.2%. It was stated by the AQSIQ at the BIR’s late-May Convention in Shanghai that there would be no changes to the registration renewal procedure for overseas scrap suppliers from that of three years ago.

In many cases in the USA, metal is being traded ‘only to keep the business relationship going and for the benefit of showing sales’. The quantities of non-ferrous scrap entering yards have remained low, with lead seen as the only metal for which volumes and price have remained steady.

In the Middle East, copper scrap is in demand but also in severe short supply, prompting major industrial end users to increase their buying percentages in a bid to attract more material – but in many cases, they are still falling short of the quantities required. In Australia and New Zealand, recent weeks have brought a general pick-up in activity levels as many companies plan for their financial year-ends.

In Mexico, the GDP forecast for 2013 has been lowered from 3.9% to 3.1%. However, the automotive sector remains a major positive for the country, now representing 20% of its total manufacturing activity.

Mexico’s share of North American vehicle production is claimed to have increased from 6% in 1990 to 19% in 2012.

In Europe, reports from France suggest some demand at good discounts under LME for almost every form of metal – but once again, the difficulty lies in securing sufficient tonnage. Demand for brass scrap has waned while stainless steel is proving hard to sell because Europe’s end users are fully stocked. Non-ferrous scrap availability in Italy is now deemed to be worse than a year ago. With copper still in demand, some are still prepared to pay small premiums for the likes of Millberry, copper granules and other high-grade scrap.

Germany has seen minor production cutbacks within the metals industry but the general mood is confident, exemplified by expectations within the German Aluminium Association of largely stable production this year despite difficult conditions.

Among the Nordic Countries, the early months of 2013 have seen Finland record -5% industrial growth and its economy is now forecast to decline this year. Sweden and Denmark are expected to grow by, respectively, 1% and 0.5% in 2013 while Norway is tipped to see growth of 2%.

Traditionally an active period for the scrap trade in Russia, this summer is expected to bring market stability and decent scrap availability so long as no dramatic price falls occur.