Brazil: market full of difficulties and uncertainties

In recent months, the recycling market has been suffering large fluctuations. At present, we are seeing low prices for iron/steel and paper commodities, as well as political and future demand uncertainties. The economy is doing well: it is exceeding growth projections and unemployment rates are low. Interest rates are still elevated, but Brazil is heading into deflation - the opposite direction to most other countries.

Low prices are a consequence of an industrial strategy and other low-priced inputs, such as pig iron, being used as substitutes. Decarbonization has been discussed as an environmental policy, but it is not reflected in an increase in scrap consumption.

In contrast to local prices, the international iron/steel market has been suffering declines which are reflected in a drop in export numbers. The same is true for other commodities such as recovered paper and non-ferrous metals.

The coming period will bring political uncertainty as directions could change completely following the run-off in the presidential election at the end of this month between two parties with utterly different ideologies.