Non-Ferrous: a reduction in pre-shipment inspection costs?

Global – ‘There hasn’t been a dull moment’ for the non-ferrous metals trade in recent months, according to BIR divisional president David Chiao. Prices have rebounded to a certain extent but, on the downside, the collapse of the major Hanjin Shipping line has created ‘chaos’ for the scrap industry. ‘Even today,’ he says, ‘a reasonably large number of containers is stranded in harbours.’ Delays and congestion are also noted by other industry experts.

On August 17, meanwhile, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) in China confirmed that it will no longer designate a certain agency for the pre-shipment inspection of imported solid waste, nearly 10 years after the regulation was first implemented, notes Ma Hongchang, BIR’s advisor on the country’s regulatory and policy developments.

It is inferred from this development that AQSIQ plans to open up the pre-shipment inspection market and break the monopoly of the China Certification and Inspection Group (CCIC), thus leading ‘inevitably’ to ‘a reduction in pre-shipment inspection costs and thus to benefits for raw material suppliers’.

In the wake of the news that India is installing its first auto shredder through a public-private partnership, the government is currently said to be ‘working overtime’ on a policy for scrapping old, polluting vehicles – a move that would bolster internal scrap supplies. Meanwhile, a resurgence in Chinese scrap buying activity – most particularly for shredded materials such as Zorba and Zurik – is currently providing ‘tough’ competition for India’s importers.

In other developments, Russia elected not to change export duties on non-ferrous scrap in September. ‘Every September for the last four years, the Russian government has lowered export duties,’ it is explained. ‘There will be no further decreases. Scrap has been placed on a special list of goods of strategic importance to the Russian economy.’

Regarding market developments around the world, there is widespread evidence of trading activity levels failing to meet expectations. From France, for example, the scrap market is described as ‘very quiet’; although most scrap yards had accumulated material during the summer holiday period, ‘volumes traded subsequently have been very low’, it is lamented.

Elsewhere in Europe, Germany reports that the familiar issue of payment delays has begun to arise in the market once more. At the same time, copper scrap supply is still described as ‘tight’ but discounts ‘have no chance of improving owing to a low cathode premium’. The UK also alludes to ‘the same old problem of not enough supply’ despite stronger LME values backed by reasonable levels of demand. And with the ferrous scrap market suffering further price declines in September, merchants in general are not anticipating an ‘overnight change’ in the currently-low volumes of non-ferrous scrap arriving at their yards.

A similar point is made in feedback from the USA. ‘The latest drop in ferrous scrap prices to the levels seen at this time in 2015 will not help encourage more non-ferrous metals into yards in October,’ it is predicted. Meanwhile, the nation’s media plants are said to be ‘struggling’ to find material at any recognisable margin. Heading south into Mexico, it is reported that lower sales for smelters and cheap, available primary material are undermining demand for aluminium scrap.

Scrap is still relatively slow in reaching yards across Australasia while demand is described as mixed. Domestic consumers are buying at current price levels and demand is also coming from traditional offshore markets – ‘but the tone is more subdued for certain grades’, it is observed.

Bucking the general trend somewhat, non-ferrous scrap availability and offers have maintained ‘a consistent tempo’ in the Middle East over recent months.