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 recent upturn in LME prices does not signal a surge in demand for physical metal in the aftermath of the summer holiday season in many parts of the world. Furthermore, feedback from some of the more prominent developing nations suggests a less-than-stellar demand outlook for many non-ferrous metals.
For China, GDP growth this year is expected to fall short of 8% for the first time in a decade, with purchasing managers reporting no indications of significant growth in either domestic or export orders for the foreseeable future. Brazil, meanwhile, is now expecting its GDP growth to struggle to around 2% for this year, prompting the government to adopt stimulus measures, including a long-anticipated cut of up to 28% in industrial electricity costs – a key development for primary aluminium producers in particular. Many domestic smelters have been threatening to shut down because their competitiveness has been impaired.
Decisive measures have also been introduced by the government in India. However, the non-ferrous market has offered little in the way of a reaction to the big policy reforms, with domestic demand for most metals remaining weak. For example, the automotive sector followed up 10 consecutive months of positive results with a fall of 19% in August this year, according to latest figures.
Another of the world’s emerging economies Mexico has seen higher scrap metal volumes coming ‘out of the woodwork’ and into the yards as a result of the more elevated LME values. Lower Chinese demand for red metals has increased the proportion of copper scrap snapped up by domestic consumers. ‘They are even taking scrap from regions which, because of their proximity to the ports and long distances to consumers, were traditionally export territories,’ it is noted.
Business has also picked up in the Middle East following LME price hikes coupled with the conclusion of the summer and Ramadan holidays. Here too, an improvement in aluminium scrap prices tempted more material into the yards while Far East buyers reportedly showed more interest in the region’s lower grades of copper scrap.
In Southern Africa, availability of copper scrap has increased marginally but consumers appear generally more reluctant to commit to large volumes, while merchants are reportedly suffering from ‘margin compression’. But also in the southern hemisphere, many companies in Australia have reported a drop in volumes; there have been several announcements in recent weeks of yard closures, redundancies and consolidation as some merchants struggle against a harsh economic climate complicated by unfavourable foreign exchange rates, volatility on the metal exchanges and general uncertainty.
In the USA, the vehicle production rate is on course to exceed 14 million units this year and secondary smelters are busy, but finding enough secondary scrap to satisfy current needs is proving difficult; as an example of the downstream effects, the Twitch price jumped more than US$ 200 per tonne in the middle two weeks of September. In Canada, meanwhile, copper spreads have widened and scrap collection rates remain weak.
Over in Western Europe, flows of material have improved but ‘it is a difficult time to sell as people do not seem to trust the recent (price) rallies’, according to one expert. France has witnessed healthy demand for copper scrap from Southern Europe, mainly from brass rod makers. For traditional mixed brass scrap, however, ingots-makers are alone in the marketplace at present and prices are deemed to be unexciting. For most grades of aluminium scrap, demand is described as ‘adequate’ in Europe for both the lower and higher grades, whereas ‘much more interest’ is reported from zinc smelters.
Feedback from Italy suggests that the lead market has weakened slightly while demand for aluminium scrap has been ‘very limited’.