BIR World Mirror on Non-Ferrous January 2012

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.

A stuttering start to 2012 has been influenced by the unusual circumstance that Christmas/New Year festivities in many parts of the world are separated from Chinese New Year celebrations by a mere 13 working days. Some works in Europe were not due to reopen to scrap suppliers until January 9 while countries such as South Africa, Australia and New Zealand are still on their long summer breaks. Generally slow trading activity has coincided with continuing concerns over the economic outlook, particularly in Europe.

Despite December clear-outs in some parts of the world, it was a quiet month in many other regions. In the Middle East, for example, scrap collections were described as only moderate in the final month of 2011 owing to low LME prices and market uncertainty. In Russia, by contrast, the slow-down in early January followed a ‘boom’ month in December. The country’s Minister of Economic Development has now signed the agreement for entering the World Trade Organization from 2012 - a move which should lead to the progressive reduction in scrap export duties over the next five years. For example, the duty on copper scrap is currently 50% but should drop to 40% from August, and then by a further 10 percentage points next year, etc. All scrap import duties will remain at 0%.

Feedback from China reflects widespread worries over the Euro and the sense of caution this situation has helped to create. It is argued that the country’s metal markets are lacking support on all fronts - export, real estate and domestic consumption - with most buyers opting for a wait-and-see policy. Despite recording relatively strong economic growth during 2010 and 2011, predictions are for a slow-down this year for the South East Asian markets; Singapore, for example, could see growth of almost 5% in 2011 reduced to as little 1% for the current year.

In India, scrap prices have begun to reflect the rupee’s depreciation against the US dollar. Faced with volatile market conditions, most traders have avoided imports while large consumers/direct importers have been buying either spot tonnages or using LME-linked formulas for long-term exposures.

In common with many other markets, Brazil reports a ‘timid’ start to 2012 for its domestic non-ferrous sector following a final few weeks of 2011 in which ‘many orders were cancelled’. On the upside, however, sales in December exceeded those of the previous month by more than 10%. Aluminium scrap prices have been holding steady against a backdrop of predictions that the country’s light metal consumption will grow on average by almost 9% per annum in the years to 2025; meanwhile, demand for higher grades of copper scrap has been bettering that for mixed copper.

In Mexico, GDP growth of around 4% last year is widely expected to be followed by an upturn of more than 3% in 2012. Many of the industries that generate and/or consume scrap have either expanded their operations or are expecting to produce at rates closer to their installed capacities this year. However, the scrap industry faces a number of challenges, including: the fragility of the international financial system; on-off demand patterns; and metals theft and fraud.

From north of the border in the USA, there has also been a flurry of positive news: for example, domestic manufacturing grew in December at its fastest pace in six months, hiring at factories increased and the automotive sector is predicting that 13.6-13.8 million units will be sold in 2012 compared to nearer 12.8 million units in 2011. As for scrap, old sheet, Tense and the red metals are proving difficult to find.

As mentioned earlier, the slow start to 2012 appears to have been particularly pronounced in Europe where Christmas/New Year period closures were extended in many cases until the second full week of the year. Reports from France suggest that reluctant sales of copper scrap also owe something to the high stocks held by many consumers. Only ingots-makers are said to be active in buying mixed brass scrap but are encountering strong competition from Far East consumers. Buyers in both the Far and Middle East are also generating healthy demand for all grades of aluminium scrap. In contrast, little or no interest is reported from Europe’s stainless steel buyers.

Meanwhile, the business outlook for the Nordic Countries has continued to deteriorate, and ‘the degree of divergence between companies and sectors has increased’, according to latest reports. Prospects for early 2012 continue to be stronger in Sweden than for the other Nordic economies whereas Finland - the only country in the region to be part of the Euro-zone - has witnessed dwindling confidence among its business enterprises.