Freight rates, which had increased enormously in recent years owing to the pandemic and the Suez Canal problem, have fallen sharply in recent months. The empty container situation has improved greatly so that shipping companies are actively looking for loads so that vessels do not sail towards Asia empty. This has put pressure on freight rates and very cheap levels are being seen for some Asian destinations.
Several economic research institutes have lowered their forecasts for German economic growth in the current year. However, private consumption is picking up again and could lead to a recovery. Germany’s machinery builders are continuing to struggle with a weakening investment mood among customers. In May, real incoming orders (ie, adjusted for price increases) were 10% lower than in the same month last year. The German auto industry has been sliding from one crisis to the next for years; after saving itself by building ever more expensive cars, that approach is now reaching its limits.
Owing to the above-mentioned factors in the industrial sector, there is less production scrap. The recycling industry feels available volumes have fallen by as much as 50% compared to the norm. Another factor is the small number of construction projects: in some regions, new construction figures are falling by up to 40%. If less is built, then fewer old buildings are demolished, with the result that demolition scrap volumes have also fallen sharply.
Small metal collectors, meanwhile, have been adversely affected by the sharp fall in the LME. Given that smaller traders and family businesses cannot hedge like the large companies in order to counter price risk, many of the former have volumes that cost too much at cost, thus creating a perfect storm that affects all three pillars of metal trading.
Aluminium ingot prices have recently come under pressure again, leading to paralysis in the industry. However, it should be noted that this problem always arises in the summer and so there is no need for nervousness. Basically, our industry is correctly positioned in the medium and long term but, just like other sectors, it is struggling in the short term with the global economic situation.