BIR World Mirror on Non-Ferrous Metals: Lower LME values add to difficult trading conditions
A concise summary of the BIR World Mirror on Non-Ferrous Metals – Issue May 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
Many parts of the world are tracing a line directly linking the reduced buying power of consumers, through a drop-off in manufacturing activity to, ultimately, lower material flows into scrap yards, according to the latest World Mirror on Non-Ferrous Metals from the BIR global recycling organization.
Much has already been said about how high interest rates and elevated energy costs have hiked the average household’s bills and thereby trimmed its disposable income. From Canada, for example, it is reported that buying power is decreasing partly as a result of prevailing variable-rate mortgages in a fast-rising interest rate environment. The widespread reluctance to commit too much to significant new investments is reflected in latest passenger car sales data from China which reveal a 13.4% year-on-year fall in the first quarter, partly on the back of an end to local government incentives.
All this is translating into lower demand for many industries that are also struggling with higher costs, such as for energy. In the USA, for example, most domestic mills are buying very little prompt metal and with wider spreads; billet cast houses are said to be especially slow, with housing-related operations down significantly. There are even reports, such as from the Nordic Countries, of production facilities signalling an intention to buy more scrap but then often backing out before closing deals, sometimes abruptly changing tenders or cancelling them altogether.
Along with lower LME values, these conditions have kept a lid on flows of non-ferrous scrap into yards. In Mexico, some scrap operators have been squeezing margins in a bid to sustain volumes coming into their facilities but, with less scrap available overall, the result is that margins become even thinner or non-existent. Some Mexican yards are also suffering thefts of complete or partial truck and container loads, either in transit or at truck line depots.
One positive factor is that freight rates are falling and are thus helping to sustain the international market. Monthly copper scrap exports from Japan exceeded 30,000 tonnes in March for the first time since last November, more than 70% of which were destined for China. However, copper scrap supply in Pakistan has tightened on reduced imports from, in particular, the USA and Europe.
In other developments, differences over definitions and procedures are still turning up in discussions between the Material Recycling Association of India and the country’s government relating to Bureau of Indian Standards (BIS) implementation in metal scraps. A key reason for this, it is contended, is interference by primary producers who want these standards to work as non-tariff barriers against the secondary industry, even though impediments to scrap flows and usage would cause direct damage to the Indian government’s decarbonization and sustainability agenda.
There is also resistance from the UK’s aluminium can sector to a proposed Deposit Return Scheme for England, Wales and Northern Ireland which, it is feared, would lead to a drop-off in can recycling performance and distort the UK beverage packaging market in favour of, for example, plastic.
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.