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BIR Non-Ferrous World Mirror January 2015

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.

Recent metal price swings have resurrected concerns over whether export contracts will be honoured upon arrival. ′Many fear a repeat of 2008 when claims and re-pricing negotiations were a daily occurrence,′ one expert has stated. However, the sharp drop in oil prices has provided the bulk of the business headlines during the early stages of 2015. And although many sectors have welcomed the resulting dip in their costs, this is no universal panacea.

In Norway, for example, oil investments are being put on hold while oil companies are seeing reduced margins and employee numbers. And oil′s decline is said to have come ′at a terrible time′ for Mexico because the country′s government ′had pinned high hopes on greater revenues and employment from increased production′ whereas now ′prospects have definitely changed′.

At least the latter country can point to ′robust′ demand for secondary aluminium on the back of automotive industry growth, although scrap processors are continuing to struggle with below-average post-consumer volumes attributed to ‘slumping prices’ and ‘government over-regulation’.

And the automotive sector continues to be the ′shining light′ in the USA, where Twitch and Zorba prices have softened but demand remains good. In Japan, seven consecutive months of negative growth in domestic car production have resulted in year-on-year decreases in aluminium alloy demand.

And in China, ADC12 aluminium alloy producers are said to be under pressure from softer domestic demand, lower primary aluminium ingot prices, the weaker Japanese Yen pushing up import costs and additional spot offers from Russian producers. Meanwhile, in figures that will have global repercussions, the People’s Bank of China has projected that domestic GDP growth will fall from 7.4% in 2014 to 7.1% this year.

Another headline event in early 2015 will be the maiden financial budget of the government elected last year in India. The country′s scrap-related businesses are hoping it will deliver some cheer, particularly as recent LME losses ′have taken the wind out of the sails of local smelters and processors′.

In particular, bodies including the Metal Recycling Association of India have asked the government to withdraw duties on scrap imports and to correct an inverted structure owing to India′s Free Trade Agreement with ASEAN countries whereby incoming finished goods attract zero duty and yet raw materials are taxed. In South Africa, meanwhile, there are concerns that certain copper scrap dealers are obtaining export permits even though they are being offered a price above the International Trade Administration Commission (ITAC) threshold.

′More illegal exports are taking place as scrap dealers are using different tariff headings and exploiting loopholes in the system,′ it is contended. Elsewhere, the weather has been a key factor in early-2015 trading levels. In the Middle East, heavy snow in some parts served to ′put some businesses on hold during the first week′ whereas, contrastingly, lack of snow and warm weather have helped ensure the trading of relatively good volumes of non-ferrous scrap in Denmark and southern Sweden.

For metal merchants in Australia and New Zealand, consumers are buying but, as normal, volumes have been low in the first month of the year. Very few loads of scrap have changed hands in Italy following the holiday break while the scrap trade in France too has been ′waking up very slowly from the holiday season′, with business attracting ′minimal margins′. For aluminium and copper scrap, demand is proving persistent for very high grade material – but at ′increasing discounts and decreasing margins′ – whereas trading among the lower grades is deemed ′scarce′.

In Germany, meanwhile, the markets are characterised by ′weak prices, large-scale availability and fragile demand′. Notwithstanding LME fluctuations, ruble prices are rising as the currency in Russia continues to devalue. The country′s winter has brought the traditional ′fight for scrap in terms of prices, payments and availability′.

 

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