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General gloom deepens for recyclers

A challenging playing field has been created by geopolitical tensions and macro-economic issues such as high energy costs and inflation.

This update was published in our latest issue >>

The mood in the non-ferrous metal markets has deteriorated noticeably in recent weeks. As an example, the German metal recycling association VDM conducts a business climate survey among its European members every quarter. At the beginning of Q4 this year, its business climate index declined again.

Both the current business situation and the outlook for the coming months are viewed more pessimistically by companies than they were at the beginning of Q3. German recyclers are not alone and the mood in metal trading and in the non-ferrous metal recycling industry has been steadily declining since the second quarter of 2021.


The recycling industry is feeling a series of burdens and the situation on the energy market is particularly critical. The sharp rise in gas prices is drastically increasing energy costs and that is accompanied by a massive loss of purchasing power. This puts a strain on industrial customers who are important for the industry. There is great concern in Europe that high energy prices will lead to a migration of metal production from Europe with the EU becoming even more dependent on China and other countries.

The expectations of German metal recyclers in the coming three months remain very pessimistic: 69% of the companies surveyed have a negative view, only 3% expect an improvement in their situation while 28% say development will stagnate at existing levels.

According to the respondents, the market supply of scrap at the beginning of the new quarter is slightly worse than in the third quarter of the year. Currently, as in Q3, 18% of companies rate the supply as good. But this time 39% of companies consider the current supply situation to be worse than in the previous quarter (last quarter it was 28%). Currently, only 43% of market participants feel a balanced supply situation.


Similar sentiments were heard at the recent BIR convention in Dubai from non-ferrous divisional board member Sebastien Perron of Labrador Recycling in the US. Until recent months, he noted, business conditions for the secondary non-ferrous metals industry had remained generally positive.

Today, however, mounting geopolitical tensions and macro-economic issues such as high energy costs and inflation ‘had conspired to create a far more challenging playing field’. To make matters worse, he said, some countries had become more inward-looking and were considering policies that ran counter to the spirit of free trade.  

‘While the EU continues to debate restrictions on exports of recyclables to non-OECD countries, there have also been discussions in South Africa and Mexico about further controls on exports of some forms of scrap.’  

On the other hand, India had grown recently with a predicted 7% GDP growth in 2022 to become the fifth largest economy in the world, breaking records for new house and car sales. In China in August 24% of new vehicles were electric, providing strong growth drivers for aluminium and the metals used in batteries. Shipping costs were less of a challenge than they had been at the previous convention in Barcelona, Perron added. 

He concluded: ‘Increased energy costs are having a detrimental effect in many parts of the world, particularly in greater Europe. Copper appears to have a bullish case, whereas aluminium demand is weaker. Capital costs increased by higher rates and inflation are clearly putting negative pressure on our industry.’ 


The International Copper Study Group (ICSG) published its latest forecast for the metal after meeting in Lisbon in mid-October. It expects world copper mine production to increase by 3.9% this year with higher growth of 5.3% in 2023.

‘Mine reduction in 2022, although continuing to increase, has underperformed vis-à-vis ICSG’s April 2022 expectations,’ the group says, attributing the lower figure to Covid-19, operational and geotechnical issues, strikes, water restrictions in Chile, lower than expected head grades and community activism in Peru.

World refined copper production is forecast to rise by about 2.8% in 2022 and 3.3% in 2023. ‘Both primary (from concentrates) and secondary (from scrap) refined output are expected to present higher growth rates in 2023.’
ICSG expects a deficit of about 328 000 tonnes for 2022 mainly due to high Chinese apparent usage and constrained growth in copper production. A surplus of about 155 000 tonnes is expected in 2023 due mainly to additional supply.

According to the latest forecast from the International Lead and Zinc Study Group (ILZSG), world demand for refined zinc is expected to fall 1.9% to 13.79 million tonnes in 2022 and rise 1.5% to 13.99 million tonnes in 2023. In China, demand is set to decrease by 3.3% this year, primarily because of decreased activity in most major zinc-consuming sectors. In 2023, a partial recovery of 1.2% is anticipated.

For lead, ILZSG says that, after rising by 4.6% in 2021, global demand for the refined metal should increase by 0.8% to 12.42 million tonnes this year and by 1.4% to 12.60 million tonnes in 2023. In 2022, usage in China is expected to have grown by a modest 0.3% while next year it should rise by 1.1%.

Read the full non-ferrous update in our latest issue >>

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