BIR World Mirror on Non-Ferrous Metals – Issue January 2024: Conflicts and weather conditions combine to hamper material flows
A concise summary of the BIR World Mirror on Non-Ferrous Metals – Issue January 2024. Full version with detailed market reports available in the Members Only section of the BIR website.
Supply chain disruption has been a major source of consternation for companies looking to move recycled raw materials in the latter part of 2023 and in early 2024, it is reported in the BIR global recycling organization’s latest World Mirror on Non-Ferrous Metals.
In particular, the ongoing tensions surrounding the Red Sea/Suez Canal have led to the diversion of many vessels around Africa’s Cape of Good Hope. As a result, transit times have become significantly extended, leading to negative impacts not only on cash-flow but also on purchasing power.
Higher insurance and freight costs have exacerbated the financial burden on companies. While many estimate the increase in shipping rates at upwards of 50%, others put the figure higher still: those applying from the UK to India and the Far East, for example, are said to have risen by almost 70%, thus making European markets a more attractive option for the country’s exporters. Indeed, the Red Sea situation has effectively led to increased scrap availability for consumers across Europe.
In its own response to the ongoing conflict in Gaza, Malaysia has banned all Israeli-flagged cargo ships from docking at its ports - including Klang, the world’s 12th busiest and a major gateway/trans-shipment hub for cargoes moving through the South China Sea. This move has led to some last-minute diversions and has partially restricted material flows into Malaysia, it is reported.
In India, the delayed arrival of imports owing to the Red Sea crisis has created problems for the country’s aluminium recyclers. With scrap availability compromised at a time when refined metal prices have been heading lower, it has become more viable to raise the share of primary metal in the raw material mix.
On the plus side from the logistics perspective, there has been an end to the strikes by truck drivers in Poland and Slovakia which had previously created massive queues at the border with Ukraine; for trucks to cross the border, however, it is still necessary to register in advance via an electronic ticket system. Also on a positive note, there is said to have been an improvement in the handling of containers at South African ports.
Lower-than-normal supply of recycled raw materials remains an issue in many countries. Reports from Germany indicate that, for certain alloys, reduced production levels have led to a decrease in the availability of post-production metals. And in both Russia and Ukraine, winter weather has cut scrap availability - by up to 30% in the case of the latter. The situation has been intensified by scrap generators holding on to stock in anticipation of stronger sales after the Chinese New Year holidays in mid-February.
Parts of Canada, meanwhile, have witnessed temperatures as low as -45 degC (or -49 degF) and an associated reduction in flows, notably from retail customers and smaller recycling operations whose equipment is struggling to function in the freezing conditions.
In the US metals sector, meanwhile, it was a slow end to last year for most consumer operations as they worked their inventories down to very low levels. Several new greenfield mills are expected to begin chasing scrap supplies towards the middle of this year, it is also noted.
In other developments, the Pakistani government has set up a special council to help exporters and foreign investors conduct business in the country; among the likely beneficiaries, it is claimed, will be Chinese investors in the metals recycling sector. And Thailand has announced the permanent waiving of visa requirements for Chinese nationals in a strategic move to encourage investment.
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.