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Gear change in non-ferrous prospects

The slump in global growth and more inward-looking policies by individual countries have undermined the previously robust markets for secondary non-ferrous materials, according to the Bureau of International Recycling.

BIR’s latest Mirror on the sector notes that events of recent months, such as Russia’s invasion on Ukraine, have seen growth running out of steam, putting most economies on an uncharted, unpredictable course. Analysts are now predicting less than 3% growth for 2022 but this figure could be pared further based on how events unfold.

‘Everyday, markets are acting and reacting wildly to the latest piece of news,’ says Dhawal Shah of Metco Ventures in India and president of BIR’s non-ferrous metals division.

‘Hyper-volatility in energy supplies, inflationary challenges and political face-offs between major powers, events like “mini-budget” bloopers or the potential credit default swaps of a marquee bank are nudging markets towards boiling point. For our industry, there is clearly too much happening: it’s all too fast to process and to get a clear sense of direction.’

Shah says that until the summer, business conditions for the secondary non-ferrous industry had remained largely secure. ‘Challenges have started to emanate from the global chaos, adds Shah.

‘Furthermore, countries have begun to be more inward-looking in their policies, sealing off raw material supplies. Our board has been very vocal about upholding the spirit of free trade and about how restrictive import/export policies for our raw materials work directly against greener ambitions.’

Ma Hongchang, who provides a regular picture of China, reports that recycling of waste materials has achieved ‘outstanding results’.

‘Compared to 2012, annual processing capacity of key electrical and electronic products in China had increased by 73 million units in 2021 and the standardized processing rate had climbed 44 percentage points,’ he writes.

‘In 2021, the volumes of nine major recycling resources in China – including scrap steel and non-ferrous metals, as well as scrap plastics and paper – had reached 385 million tonnes, more than twice the total for 2012.

Recycling resources have become important raw materials for industrial production, and their role in supporting and ensuring national resource security has gradually increased.’

Fellow divisional board member Shen Dong, of Omnisource Corp, reports that China’s new energy vehicle tax exemption has been extended to the end of 2023.

Of the 2.1 million vehicles produced in August, 7% were hybrids and 24% electric-operated vehicles. Retail sales amounted to 1.87 million units for an increase of 2.9% over July.

Consequently, the recycling of lithium batteries is becoming a hotspot, he noted. China’s Ministry of Industry and Information Technology has added crude nickel-cobalt hydroxide made from lithium batteries to non-ferrous industry standards.

Besides domestic business opportunities, leading recyclers are exploring global markets, with new recycling facilities designated for South Korea, Indonesia and Europe.

Rick Dobkin of Shapiro Metals writes that the US Federal Reserve has continued with its aggressive monetary tightening to try to slow persistent inflationary pressures.

‘Rising interest rates have slowed the red-hot real estate markets as loan rates are at highs not seen in more than 10 years,’ he says. ‘New home construction is crumbling under the weight of these higher rates, and the frenzy around home-buying seems to have been tempered.’

Metal prices are continuing their roller-coaster ride, Dobkin adds, with pricing falling across the non-ferrous realm. ‘The all-in primary aluminium price has dropped close to 20% since July, falling US$ 1 per pound from its February record – quite a sharp descent in little more than six months.

‘There has also been a noticeable fall-off in demand, which had seemed like a summer slowdown but has since persisted. Demand for aluminium has dropped across the board.’

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