Australasia

It has been an interesting start to the year for metal consumers and merchants in both Australia and New Zealand. Initial market price gains quickly moved a lot of inventory out of yards and probably brought people back early from their holidays! The volatility that has ensued since then reminds us of how challenging global markets can be and how consumers and merchants need to work together so that everyone prospers.

The Reserve Bank of Australia (RBA) increased the official cash rate by 25 basis points to 3.85% in early February - in line with economist and market expectations. This was, among other factors, the result of a material pick-up in inflation against a backdrop of greater momentum in demand. Economists are forecasting up to two more increases in the rate, which is interesting as this would signal that the RBA was leading the global tightening cycle after having lagged it previously. This will no doubt have an impact on currencies, particularly the New Zealand and Australian dollars with the latter being the former’s largest trading partner.

The job market in New Zealand remains challenging. At 5.4%, the unemployment rate is at its highest in a decade and highlights how businesses are continuing to struggle. Manufacturers are finding the current market a real challenge and this is impacting scrap metal generation, affecting merchants and consumers collectively.