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Nordic Countries

Scandinavia’s scrap dealers are facing a situation very similar to that in August 2008 when falling demand for scrap was the first sign of the crisis that followed.

The highly uncertain security policy situation in Europe - not least following the recent gas pipe bursts in the Baltic Sea, not far from Danish and Swedish territory - has added to sharply rising inflation and higher interest rates. There is a great uncertainty which has naturally spread to Scandinavia’s consumers and industrial enterprises. The result of this situation is, unsurprisingly, falling demand for scrap from consumers, postponed delivery times and increased deductions from LME.

The increases in inflation have been the strongest seen in many, many years. In Sweden, inflation climbed to 9% in August, its highest level in 30 years. Danish inflation was 8.9% in the same month, which is the highest since 1983. Norway and Finland fared slightly better with inflation of 6.5% and 7.6%, respectively.

Prices of natural gas, used for heating in many Danish homes, have increased by a factor of four compared to the same time last year. And as we approach the winter months, all Danish households are finding that their disposable income has been greatly reduced, which means that the country’s consumer confidence indicator has slipped to the lowest level ever recorded.

As elsewhere in Europe, Scandinavia has witnessed an increase in interest rates, with falling investment activity and a stagnant housing market. As the European Central Bank continues its efforts to control inflation, more interest rate hikes can probably be expected in the coming months.