BIR – The following article is based on the latest Non-Ferrous World Mirror produced by the BIR world recycling body for the benefit of its members. BIR members can login at www.bir.org to read the complete analysis.
As Ramadan and also the summer holiday period in many parts of the Western World draw to a close, a sense of caution pervades the non-ferrous scrap markets. Uncertainty has been created by recent stock market turbulence and on-going sovereign debt worries, as well as a number of other factors including the introduction of less flexible customs procedures in southern China such that all inbound shipments must be unloaded at certified plants and multiple-item containers are not permitted to file a customs declaration in the country. These policies are said to be leading to higher handling costs.
Even in buoyant Brazil, industries have been cutting back on their inventories because they fear the impact of the reduced availability of credit to finance consumption. Meanwhile in Mexico, sluggish consumption in its main export market of the USA has stifled demand for most non-ferrous metals, especially some of the high-grade aluminium qualities. Concern in Mexico is also being generated by the proposed termination of the “Maquiladora” tax scheme at the end of this year: this gave tax exemptions for temporary imports of raw materials and goods for further processing inside the country.
In the USA itself, scrap flows are described as very good, with recovery in the aerospace sector boosting the volumes of turnings and solids, and with aluminium rolling mills and extruders enjoying steady demand. By contrast, non-ferrous scrap activity in India has been generally lacklustre – although demand for copper scrap appears well balanced. In the Middle East, meanwhile, the volumes of scrap entering yards has been some 30% below the monthly norm owing to the impact of Ramadan and upheaval on the markets. It has been suggested that scrap collectors in the region reacted much more quickly to the recent global economic dip than they did to the one in 2008, holding off on purchases while concentrating on shipping outstanding contracts and collecting payments.
“Relatively flat” market conditions are also reported from Australasia, with volumes turning downwards. One factor in this equation has been the extreme weather experienced in New Zealand over recent weeks, with widespread snowfalls resulting in temporary business closures and impacting on supply in some regions.
As mentioned above, recent weeks have accommodated the prime summer holiday period across most of Europe. According to feedback from France, activity levels have been lower than normal during this period “because of the sharp collapse of all the markets”. Summer closures have limited demand from Europe’s brass and copper consumers while smelters have continued to display very little interest in zinc scrap, to the extent that suppliers are now concerned no more orders will be placed ahead of October. By contrast, strong buying interest is reported among the continent’s lead consumers – but material has not been plentiful and stocks are very low.
In Germany, the markets for both primary metal and scrap have remained relatively calm during recent weeks, although order patterns for the majority of industrial metals have been cautious in the main. Metals producers are said to be working at full capacity but their prospects for next year now appear more uncertain given the economic developments that have unfolded of late. Economic and industrial production growth forecasts for the Nordic Countries have been revised downwards following the recent deterioration in sentiment brought about by collapsing stock markets. That said, aluminium is appearing to be stable in outlook and is enjoying good support at current price levels.
Unlike in most parts of Western Europe, Russia does not experience a holiday-related slow-down in non-ferrous industry activity during August. During this so-called “hot” period, scrap availability is healthy and plenty of material arrives in processors’ yards. At this time, copper-consuming mills are said to be offering stable prices with prompt payment for immediate delivery. On the downside, however, considerable problems have been reported in sourcing railway wagon capacity, with the result that many shipments are falling victim to delay.