BIR Abu Dhabi 2023 - Non-Ferrous Metals Division: Horizon offers brighter prospects for non-ferrous metals recyclers
Despite a year of recycled non-ferrous metal producer price indices in the US turning negative, the medium to longer term is much brighter, delegates at the BIR convention in Abu Dhabi were told on 24 October.
The optimism came from Joe Pickard, chief economist and director of commodities at ISRI, the US recyclers’ organisation who also set out the challenges currently being faced across the non-ferrous sector. “When I talk to our ISRI members, there’s not a single one who says 2023 has been a better year than 2022, or 2021 for that matter. Going forward we have some tremendous opportunities to grow our businesses. Even though we are experiencing some short-term challenges the medium-to-longer-term prospect is incredibly bright for our industry.”
Despite the US economy being very resilient, there had been “a real divergence in different sectors” with the service sector outperforming manufacturing in nearly a year. Even so, Mr Pickard pointed out, the spreads for US recycled copper and aluminium over the same period had held relatively steady with supply and demand generally in balance.
He cautioned that China’s property sector crisis could deepen with global consequences for commodity exporters. The International Monetary Fund had revised down its growth forecasts for China and JP Morgan and S&P Global had reported on manufacturing globally remaining “the main drag on overall economic growth”.
The tight labour market in the US, with more job openings than people unemployed, was a major challenge for US recyclers looking to hire and retain, Mr Pickard pointed out. It also strengthened the arm of trades unions and continuing industrial action in the automotive sector hitting vehicle output had “extremely strong ramifications for non-ferrous demand in the US”.
Markets were changing, he pointed out. With additional recycling capacity coming on stream in the US, the trend for lower proportions of non-ferrous exports was likely to continue. China’s drive to cut low-quality scrap imports meant that the US was now exporting higher quality non-ferrous consignments, such as Bare Bright and Copper 1 and 2. India was now the second-biggest market for all recycled commodities combined and that country offered potential for greater trade.
Mr Pickard was encouraged by the number of new facilities coming on stream in the US to process secondary metals, notably copper and aluminium, saying he could not fit them all on his slides. Aluminium Dynamics and Novelis had announced major multi-billion projects which “should tighten market balances going forward”.
The second guest speaker, Deepesh Goyal, chief commercial officer of Fujairah Gold in the UAE, considered the Middle Eastern copper market. Fujairah Gold is a subsidiary of the Indian mining multinational Vedanta Resources Ltd. Mr Goyal said five years ago his company was producing a range of primary metals and “we didn’t want to get into secondary”. “But because of the ESG goals and other commitments, we primary producers feel we cannot leave this low hanging fruit if we are to reduce our carbon footprints.”
Focussing on copper, he said demand from the electric vehicle and renewable energy industries meant the global outlook was “great”, offering opportunities for recyclers. Overall demand was set to increase by one million tonnes every year until 2030. Consumption in the Middle East was expected to grow by nearly 50% over the same period, greater than the global average. Mr Goyal identified the key challenges for recyclers as being regulations, trade restrictions, quality consistency, transparency over trading deals, and low margins. He pointed out that Gulf countries exported around 200 000 tonnes of copper annually so that offered a real opportunity for those looking to refine scrap locally.
Asked if there were any plans to acquire recyclers, he said his company was ready to invest and was looking for technology solutions. “We need a constant feed of secondary metals to make it viable and sustainable.” He also said that secondary metals were increasingly used in its products. The current figure of 15% would soon rise to 20%. “Internally, we hope to get to 30% but quality and consistency is the issue.” The company was also investing in the integration of other secondary metals such as zinc and lead.
Paul Coyte, the new President of the BIR Non-Ferrous Metals Division and trading manager and managing director of Hayes Metals in New Zealand, was upbeat during his opening comments.
“We are the traders, the processors, consumers and the manufacturers that are collectively making the world a better place. What we receive as raw material and reuse is contributing to millions of tonnes of net carbon emissions savings every year and it is something we should celebrate.
“Another thing we should celebrate is 75 years of being an organisation. It’s incredible to see how far BIR has come over those 75 years and yet the principles remain the same.”