The UK will enjoy three four-day weeks this May because, in addition to our traditional May Day and Spring Bank Holidays, an extra day of national holiday has been introduced to mark the coronation of King Charles III and his Queen Consort Camilla.
Recently, the Bank of England and the Office for Budget Responsibility, which had both been projecting that the UK would slip into a long recession in 2023, have axed their recession forecasts. A strong rate of service sector growth meant that the UK economy started the second quarter in positive fashion. Overall private sector output expanded at the fastest pace for a year despite another fall in manufacturing production during April, according to Tim Moore, economics director at S&P Global Market Intelligence.
Resilient spending among households lured businesses into raising prices to partially protect their finances from higher costs, thus raising the risk of ongoing high levels of inflation.
The Bank of England has just raised interest rates for the twelfth time in a row, most recently to 4.5%, in a bid to tame inflation. Inflation is currently running in double digits at 10.1%, or more than five times the Bank’s target of 2%.
For those trading in non-ferrous metals, conditions in the UK remain difficult. The slowdown in the manufacturing sector is still leading to reduced volumes of non-ferrous scrap being available. Furthermore, the recent, continued fall in LME prices has not encouraged merchants to sell what material they do have. There is a hope that LME prices might improve and so merchants are prepared to wait in the short term in the expectation of receiving higher prices. The significant fall in ferrous scrap prices has also had the effect of slowing down supply as many merchants’ suppliers bring both ferrous and non-ferrous metals at the same time.
Demand from Europe and the Far East is still reasonable but has not increased noticeably in recent weeks. Stringent quality criteria for materials, particularly in China, continue to be a constraint on sales to that region.
Demand for lead is fair, with LME and scrap prices having held up relatively well.
Aluminium scrap is more difficult to place as consumers are having to absorb higher production costs and reduced demand for finished product. Consequently, they are keeping low feedstocks and purchasing only on a “case-by-case” basis.
The aluminium can sector has stepped up its lobbying over the planned Deposit Return Scheme (DRS) for England, Wales and Northern Ireland with talk of “perverse incentives” and market distortion. There are fears that the current DRS proposal will lead to “backsliding” in aluminium can recycling performance from what is already being achieved. In its current form, it would distort the UK beverage packaging market in favour of other packaging types and support more plastic being seen on supermarket shelves.