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BIR Non-Ferrous Metals World Mirror November 2012

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.

The metals markets appear to be lacking momentum – partly because of reduced buying interest from countries which, in recent years, have provided the engine of world growth. Notably, GDP growth in China during the third quarter is expected to be between 7% and 7.5%, which would be the lowest in 20 years and which is prompting all businesses – including those purchasing scrap – to be more circumspect. And in India, bold predictions from the government that GDP would rise 7% in the current fiscal year have been undermined by a forecast of sub-5% growth from the International Monetary Fund.

As an example of stuttering momentum, India’€™s vehicle sales slumped 9.43% in September this year, the steepest drop since 2007/08; and this sector’€™s growth is now projected to be 5-7% for 2012/13 rather than the 11-13% forecast at the start of the year. In addition, demand for new houses and commercial space is said to have fallen ‘€˜dramatically’€™. The slow-down in China has improved raw material availability from international sources but purchases have been limited in India because of lower outputs.

Meanwhile, car manufacturing remains ‘€˜on a record pace’€™ in Mexico and could well reach 2.8 million units this year, boosting demand for aluminium scrap. Overall, the country’€™s manufacturing sector remains reasonably healthy and so the availability of industrial scrap is good. There are rumours that VAT might be increased from the current level of 16% to 20% – a move which, it is claimed, ‘€˜could have a remarkable impact on the scrap trade as local scrap prices are often distorted by VAT’€™.

In Brazil, there has been a shortage of aluminium scrap generation while UBC and primary grade prices are suffering severe pressure; at the same time, demand is slow for the lower grades of copper. Up into North America, demand for metals is described as ‘€˜softening’€™. Some of the largest aluminium mills are said to have been ‘€˜completely out of the market’€™, with many consumers seemingly having fulfilled their October and November requirements when the light metal’€™s recent price spurt on the LME prompted a bout of scrap selling activity.

In Western Europe, the recent higher price levels also led to a flurry of market activity – but uncertainty has since returned and many producers are now focusing once again on keeping their raw material stocks to a bare minimum. Aluminium scrap buying interest in Germany has disappointed expectations while demand for copper scrap has been similarly ‘€˜moderate’€™. The slow-down in industrial production in Italy has led to a reduction in scrap availability, leading to price increases ‘€˜for those few lots which become available and which are destined to be put up for sale’€™.

Some consumers in France have been buying high-grade copper scrap at reasonably good levels for delivery before the end of this year. ‘€˜Rather unusually, lower prices have been seen in Asia than on the European market,’€™ it is added. Increasingly less demand is coming from Europe’€™s aluminium consumers – ‘€˜partly because of the impact of the economic crisis on the automotive industry’€™, it is also suggested from within the French market.

Although Europe is not buoyant at present, some projections suggest a brighter 2013. For example, latest predictions are for all of the Nordic Countries to record economic growth some 1-1.5 percentage points higher next year than they will have achieved in 2012.

A ‘€˜sluggish’€™ economy in South Africa is blamed for the 20-30% drop-off in scrap arisings witnessed by most metal merchants; at the same time, domestic demand for secondary aluminium remains ‘€˜poor’€™. Meanwhile, the new Second Hand Goods Act is said to have thrown up differing interpretations and enforcement approaches from district to district.

More positive feedback comes from the Middle East and Russia. In the case of the former, non-ferrous scrap has been sourced in decent quantities following the conclusion of the recent holiday periods and the slight improvement in LME levels. And activity in the Russian market has been heightened by the expectation of snowfalls in the near future; domestic prices are said to remain ‘€˜quite attractive’€™. But bearish sentiment prevails in Australia and New Zealand where volumes are ‘€˜noticeably lower’€™ and many merchants are reporting quiet trading conditions.

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