BIR World Mirror on Non-Ferrous Metals – Issue July 2024: Margins become a casualty of the intense battle for material
A concise summary of the BIR World Mirror on Non-Ferrous Metals – Issue July 2024. Full version with detailed market reports available in the Members Only section of the BIR website.
As Europe heads into its protracted summer break, scrap availability remains tight and competition for material can prove intense even for relatively small volumes, according to the BIR recycling organization’s latest World Mirror on Non-Ferrous Metals which draws together market feedback from experts around the globe.
One of the main impacts of such strong competition is downward pressure on margins, leaving some smaller yards struggling for their very existence in the Nordic Countries, it is claimed. And from Poland, it is reported that the reduced availability of copper scrap has left several market participants battling to meet their long-term contract obligations on red metal supplies.
Traditionally, the period immediately prior to the summer holidays is characterized by yard clearances. However, the recent jump in metals prices lured additional units into the marketplace well ahead of the shutdown period. As a result, the market is witnessing little in the way of surplus and conditions are expected to remain slow over the coming weeks. From the UK, for example, it is suggested that demand for non-ferrous scrap is still apparent but that volumes are scarce in some parts of the country.
In other factors affecting the market, ports in Germany are experiencing frequent strikes, often with little warning. These disruptions are said to be causing substantial planning difficulties for recycling operations. Meanwhile, Russia’s secondary aluminium producers are struggling to find homes for their metal amid a drop in orders from Asia.
Across in North America, the 10-20% drop in non-ferrous volumes reported in Canada for the first quarter of this year has now been replaced by more positive metal flows, not least because of the recent highs recorded by copper. That said, demand for recycled copper has slowed moving into the summer months.
In the USA, July has prompted the familiar slowdown in automotive sector consumption as manufacturers implement summer breaks. Meanwhile, rolling mill grade aluminium scrap prices remain high as material is in very short supply, with most customers in the market for prompt material.
In Mexico, the result of the early-June election has raised concerns among the business community, not least because this is likely to spur reforms that will increase companies’ costs; these could include minimum wage increases, reductions in working hours, increases in paid vacations and higher pensions. Meanwhile, metal flows into Mexican scrap yards remain subdued, as does demand for most aluminium scrap grades.
There has also been an election in South Africa, leading to a government of national unity and to a reportedly brighter outlook for businesses and the country in general. Load shedding has been suspended for more than 100 days. Finding a way forward for state-owned enterprises such as Eskom, Transnet, Denel and SAA is expected to be a point of post-Election focus in order to boost the economy and bring further stability.
Increased shipping costs into India have been driving up aluminium scrap prices, thereby negatively affecting recyclers’ margins. However, there is no shortage of scrap. Also in Asia, China’s stringent scrutiny of Certificates of Origin and export qualifications relating to aluminium ingots are said to be posing significant operational and management challenges for Malaysia’s recycled materials processing industry, which relies heavily on the Chinese market. Owing to this complex and time-consuming process, the pace of Malaysian aluminium ingot exports to China has slowed considerably.
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With contributions from its members, BIR publishes periodical commodity reports under the label "BIR World Mirror". These detailed reports exist for Non-Ferrous Metals, Ferrous, Stainless Steel / Alloys, Paper, Plastics and Latin America and provide BIR members with up-to-date information on the respective commodity or market segment.
The report on Non-Ferrous Metals appears once every two months, whereas Ferrous, Stainless Steel, Paper and Plastics are published quarterly. Latin America is covered twice per year.