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United Kingdom

The continuing volatility in the metals and currency markets is still proving a challenge for non-ferrous metals merchants and traders in the UK, particularly for copper and, more recently, aluminium grades. However, at least it appears that the nickel market has settled down, enabling stainless buyers to firm up and improve their prices. The lead market is consistent, if somewhat uninspiring,

The aforementioned volatility in LME aluminium has meant obtaining firm prices for a number of grades (turnings and wheels, for example) has proved difficult, although buyers are slowly returning. Sales of other aluminium grades have been relatively satisfactory, allowing for significant price readjustments.

Demand for copper and brass grades remains reasonably good, and likewise for cable and granules.

Availability of scrap is still tight, with many suppliers saying that deliveries are sluggish. Owing to the significant recent drop in ferrous prices (albeit from record highs), many UK merchants handling both ferrous and non-ferrous scrap have been concentrating on destocking iron in order to benefit before the price changes.

The rise in interest rates, coupled with high energy costs and inflation, are all causing issues for merchants, especially when added to the change in the red diesel allowance.

Interest rates have recently risen to 1% from 0.75% as the Bank of England looks to slow inflation. The Bank warned in early May that inflation will reach 10% by the end of the year. As inflation and interest rates are closely linked, this will have a knock-on effect on its base rate. Interest rates in the UK have been at historically low levels ever since the global financial crisis of 2008; the base rate was as low as 0.1% last year but is now at its highest since March 2009.

Despite the best efforts of the British Metals Recycling Association and its members to lobby Members of Parliament and the government, the metal recycling sector’s entitlement to use the rebated fuel known as red diesel (owing to the red dye used to make it easily identifiable) was withdrawn on April 1. HM Revenue and Customs has said the new restrictions are designed to help meet “climate change and air quality targets” and “more fairly reflect the harmful impact of the emissions” produced by red diesel.

The government has set the target of the UK becoming carbon neutral by 2050. According to the Treasury, ending the rebate “will help to ensure that the tax system incentivizes users of polluting fuels like diesel to improve the energy efficiency of their vehicles and machinery, invest in cleaner alternatives, or just use less fuel”. It added that red diesel accounts for around 15% of all the diesel used in the UK and is responsible for the production of nearly 14 million tonnes of carbon dioxide a year.