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 strike called by the National Union of Metal Workers of South Africa (NUMSA) on July 1 has reduced the country’s scrap generation levels. The domestic market for non-ferrous metal had been reasonable in June because most companies looked to build stock for their customers ahead of the strike action. Meanwhile, draft amendments to scrap export control guidelines are still being finalised and clarification is awaited on certain points.
Upheaval is also taking place in Mexico where fiscal reforms have seen modifications to the so-called ”Maquiladora” scheme. Unlike in the past when companies could import raw materials tax-free so long as they exported the finished or semi-finished products that they produced along with this scrap, importers must now pay VAT on all the incoming material – and only after exports can they engage in the cumbersome process of applying for a refund.
Meanwhile, the threat of ever-greater EU and US sanctions hangs over Russia as it heads towards the scheduled reduction of its non-ferrous scrap duties in order to comply with its World Trade Organization agreement undertakings.
Now in its low-production season, China has been relatively quiet in the international non-ferrous scrap markets of late – not least because of the higher prices demanded. Scrap imports into India, meanwhile, have been impaired by the better prices offered by buyers in other countries and by a reduced flow from the Middle East owing to the holy month of Ramadan. India’s secondary smelters are suffering from an acute labour shortage and tight cash-flow.
Despite the aforementioned slowdown for Ramadan and ongoing turmoil in the region, the Middle Eastern market has been performing well and trading levels are described as ‘steady’. And staying in Asia, Japan’s aluminium scrap market has remained healthy and the premium for primary aluminium ingot has risen to US$ 400-410 per ton in the third quarter.
Supply of scrap has tightened owing to growth in exports to South Korea. Many merchants in Australia and New Zealand have been experiencing lower trading volumes while a steady order flow from secondary consumers has left supply matching demand. The Reserve Bank of New Zealand has raised interest rates yet again in an attempt to turn down ‘the heat within the domestic economy’. Some analysts believe the New Zealand dollar is overvalued by 20%, thus providing exporters with a stiff challenge.
In the Americas, scrap buying and selling have been very slow in Brazil whereas Zorba and Twitch prices in the USA have posted modest gains in recent weeks. However, the UBC and scrap battery markets in the USA are termed ‘flat’. Meanwhile, the onset of America’s produce season has triggered hikes of up to 60% in freight rates over a short period.
Across into Europe, copper has continued to attract high levels of demand and yet is proving difficult to source in Italy. Zinc and lead have both witnessed an increase in price and demand. Aluminium has benefitted from an upturn in vehicle sales and all grades of scrap are available to a greater or lesser extent.
In the Nordic Countries, July is proving to be busier than the seasonal norm for the scrap business, with the recent increase in LME prices thought to have had a galvanising effect on scrap sellers. Some grades of aluminium have recorded their highest premiums ever seen to the LME and demand for copper scrap is also quite good.
In Germany, meanwhile, the metal markets have been slow to gather momentum even though order levels are sufficient, machinery is busy and demand is high. Low metal prices and high costs have conspired to keep a squeeze on margins. In the scrap sector, demand is described as ‘solid’ but supply ‘scarce’. Margins ‘are continuing to shrink’ while competitive pressures between companies are increasing.