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Middle East

The challenges surrounding our industry are increasing every week, if not every day. The third quarter was one of the most chaotic periods in recent times for global trade owing to the international shipping crisis - one of the outcomes of the pandemic which has created a supply chain nightmare.

Shipping disruptions have put heavy pressure on the supply of scrap metals. There have been freight hikes of more than 300% for container bookings to some destinations, especially Europe, as well as no space available on some vessels. Normal container shipping routes and vessel schedules have been altered, leading to delays in scrap arriving at mills and refineries. This has created a huge gap in production and thus inflated the prices paid by consumers for scrap.

Stagflation remains a major threat to global trade. The LME recorded elevated levels across all metals during the third quarter, with highs seen for zinc, aluminium and copper before a retreat in more recent weeks.

Another major development impacting non-ferrous is the bursting of China’s real estate bubble with the recent news about property developer Evergrande. The markets were hit by fears of a domino effect on many industries around the world. Base metal markets have felt the pressure and copper has dropped in recent weeks, with low volume movements and demand into China owing to the recent holidays.

Another challenge facing the industry concerns the shortage of silicon metals, which are widely used by secondary aluminium alloy smelters. The biggest producer of the metal, China, has been affected by power cuts, thus reducing silicon metal production and creating immediate shortages. The silicon metal price spike is restricting capacity utilization by aluminium alloy producers and hampering end-user markets, as seen among die-casters and the car industry.

Meanwhile, the long-awaited Expo 2020 has opened its doors in Dubai, generating positive sentiment among investors in the region and across markets. In the Middle East’s non-ferrous market, there has been a slowdown in the supply of scrap metals owing to the supply chain crisis, thus limiting movements of material outside the region.