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.
In crisis-torn Europe, consumers are showing no real appetite to build stocks in any of the non-ferrous metals markets. Cash flow remains tight and larger scrap companies are weighed down by substantial fixed costs as well as low capacity utilisation rates of typically 50-60%. Only the reduced availability of scrap is preventing a further deterioration in prices and discounts.
France reports healthy demand for copper scrap from Southern Europe, mainly from brass rod makers who have already started to buy for delivery after the summer holiday period at decent prices. However, the same region is showing little interest in mixed brass scrap; the majority of this material is being exported to the Far East at better prices – but the market is also slowing there too. For most grades of aluminium scrap, demand is satisfactory within Europe.
Copper scrap prices in Italy have largely followed the LME trends, both upwards and downwards. The brass rod market has been hit by a lack of demand from consumers. Meanwhile, feedback from the Nordic Countries suggests markets have been affected by sentiment elsewhere in Europe even though local growth forecasts remain unchanged at 0.5-1.5% for 2012.
Summer is traditionally the slow season in China and so copper prices are expected to remain around RMB 54,000 per tonne and aluminium at nearer the RMB 15,500 level. Lead has dropped to RMB 14,800 per tonne while zinc has dipped to RMB 14,600 under the pressure of high inventories.
Much of the disquiet in India, meanwhile, is emanating from the 25% devaluation of the domestic currency in relation to the US dollar over the last year. Domestic car sales increased only 2.8% in May – the slowest growth in the last eight months. China and India remain the leading two export destinations for scrap from the Middle East – a region in which the scrap market is described as ‘nervous’ and where volumes have fallen while margins are claimed to have ‘disappeared’.
In North America, prices of Tense, Taint Tabor and Twitch have dropped typically US$ 150-180 per tonne in recent weeks. Demand remains steady but one major consumer has declared its intention to withdraw from the Twitch market for the second consecutive month owing to high inventory levels. Although export buyers are described as ‘plentiful’ for all grades of non-ferrous scrap, suppliers in the region are complaining that they have little to offer.
To the south, the copper scrap market in Brazil will come under a similar pressure as the largest buyers have confirmed a one-month suspension of purchases. Aluminium scrap is changing hands at very low levels while zinc scrap is trading at 66% of high grade. In Mexico, meanwhile, aluminium scrap grades such as Tense, Taint Tabor and Telic have suffered in line with LME weakness, with purchase managers said to be ‘more reluctant to make non-essential buying decisions’.
Copper spreads have narrowed slightly to end a period of growing discounts for scrap, although they have yet to return to 2011 levels. And following ‘subdued’ buying activity, encouragement has been taken from the renewed demand for red metals from Taiwan and China.
Market conditions remain slow in both Australia and New Zealand, with intake volumes generally lower than normal for the time of year and discounts continuing to widen in traditional export markets. In Malaysia, local scrap generators have been booking sales with domestic consumers rather than selling into export markets in response to the inability of weak international metals markets to offset export tariffs. Meanwhile, small aluminium alloy manufacturers have been establishing themselves in Thailand in order to take advantage of duty-free trade agreements with India, thus leading to heightened competition for a shrinking pool of scrap.
Metals recycling operations in South Africa are also reporting a significant drop-off in material availability – a phenomenon attributed to falling commodity prices and reduced economic activity. So far, no high-profile arrests or prosecutions have been made under the new Second Hand Goods Act regarding the possession of copper scrap with insulation removed, which came into effect on May 1; anyone in possession of such material must take reasonable steps to ensure that it is not of questionable provenance.
Finally in Russia, large mills and small factories alike are declining to buy aluminium scrap on a regular basis; meanwhile, copper scrap prices have started to head downwards.