BIR World Mirror on Non-Ferrous Metals: Business pressures intensified by policy and regulatory moves
A concise summary of the BIR World Mirror on Non-Ferrous Metals – Issue December 2022. Full version with detailed market reports available in the Members Only section of the BIR website.
First the good news, then the bad news. The threat of a ban on Mexican aluminium scrap exports has been lifted as this option was ultimately omitted from an official document containing measures to tackle food inflation. However, and as reported in the latest World Mirror on Non-Ferrous Metals from the BIR global recycling organization, long-held concerns over the potential for new scrap export restrictions in South Africa have now become a reality.
On November 30, the South African government introduced a six-month export ban on various forms of scrap, including ferrous and copper (see BIR news item dated December 1 for more details). The ban forms part of the government’s bid to curb metal thefts, which have been contributing to power outages as well as racking up huge infrastructure repair costs.
Three months earlier, BIR had written an official letter to the South African government in which it argued that restrictions on trade - such as export bans - “do not address the root cause of the theft problem” but rather deal “substantial harm” to “an essential economic sector”. In its communication, BIR had also identified alternative approaches to theft prevention, including support for legitimate recycling businesses by closing illegal operations, as well as unregulated scrap yards, metalworks and foundries.
Meanwhile in India, there is continuing pressure from a government department for the introduction of quality standards relating to trading aluminium and copper scrap, with many experts regarding the proposal as a non-tariff barrier. This coincides with ongoing concern in Europe about the potential impact on scrap trading of a proposed new Waste Shipment Regulation.
Other government-related hurdles include continuing COVID policy tightness in China, where shrinking domestic supply is boosting import volumes. According to latest data, China imported 1.36 million tonnes of copper scrap during the first nine months of 2022, including 167,000 tonnes in September, which equates to an increase of roughly 10% year on year.
Many of the country/regional reports contained in the latest BIR Mirror make reference to lower volumes of scrap entering yards. For example, metal merchants in New Zealand and Australia have entered a busier period ahead of closing for the summer holidays later this month, but most say volumes are steady to slightly lower than at the same time in previous years. In Canada, scrap tonnages from infrastructure and demolition sources are holding to trend but those from retail and industry have slowed.
Across into Europe, volumes of new scrap are said to have declined sharply in Germany as a result of curtailed production activities. The Nordic Countries are witnessing a drop-off in scrap coming into yards, albeit from very high levels, while non-ferrous metals merchants and traders in the UK are reporting quieter-than-normal conditions, with some saying they do not expect to see the usual pre-Christmas uplift while predicting suppliers will be taking earlier and longer holidays this year.
Many of the Mirror reports allude to more muted scrap requirements in key sectors - such as in the USA, for instance, where secondary smelter scrap needs among domestic producers have become less pronounced. In contrast, copper scrap is said to be in high demand both domestically and for export to Europe and Asia.
In conflict-hit Ukraine, meanwhile, most brass and aluminium semi-finished producers are being hampered in meeting their contract obligations by unscheduled power blackouts and difficulties in restarting furnaces.