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Industry faces tough times but prospects are positive

Most leading recycling companies are experiencing tough times - to the extent that Bureau of International Recycling (BIR) world president Björn Grufman had looked ahead to the organisation’s latest Autumn Convention by noting that widespread optimism this time last year had “disappeared”.

The head of Sweden-based Metallvärden put this change of mood squarely on over-capacity in many sectors and the pronounced slowdown in the global economy.

Although many companies are “having problems in covering their costs”, he told the Barcelona gathering, the longer-term outlook is somewhat brighter: “The [recycling] industry is still growing, and more and more companies are taking part in it,” said Grufman.

His comments dovetailed neatly with sentiments voiced at the various commodity meetings in Barcelona, with expressions of dismay at urrent market conditions interspersed with more positive noises about prospects. 

Ferrous

As reported in MRW last week, the European Ferrous Recovery and Recycling Federation president Tom Bird, of Van Dalen Recycling UK, believes that the final quarter of 2012 “should prove to be better than the previous three quarters”. He told delegates to the BIR ferrous round table that “prices in the EU markets should remain relatively stable and not fall further”.

His optimism was echoed by Blake Kelley of Sims Metal Management, who confirmed that “some increased pricing is already evident” in the US.

“Industry prospects appear more stable and positive…even though economic uncertainties continue to keep buyers cautious, which naturally limits inventory accumulation”, he said.

Keynote speaker Ralph Oppenheimer, executive chairman of London-based international steel trader Stemcor, predicted that ferrous scrap values will rise “by at least $50 (£31) per tonne” in the coming three months, not least because scrap is “seasonal” and prices tend to rise in the winter.

Looking to the longer term, Oppenheimer anticipated further increases given that “demand for scrap is growing faster than supply”. His presentation also contained the observation that Stemcor “would like to grow in scrap and invest in processing facilities”.

But this swell of optimism at the round table was tempered by, among others, Hisatoshi Kojo of Metz Corporation in Japan. Having acknowledged that the scrap market had “clearly hit the bottom”, he argued that the scrap price recovery would be capped by the fact that steel product prices cannot be expected to improve until next spring at the earliest, especially given the over-capacity in China of around 200 million tonnes a year.

Stainless

Taking charge of his final meeting as chairman of the BIR stainless steel & special alloys committee, Michael Wright of ELG Haniel cast severe doubt on whether global stainless production in 2012 would achieve the increase of 4% to 33.3 million tonnes that was projected earlier this year.

Indeed, there is a strong possibility, he said, that the final total will fail to match that of last year owing to recent months being “much weaker than anticipated”.

Wright, who will be succeeded as committee chairman by Frank Waeckerle of Cronimet Germany, has also predicted that UK production will drop from around 310,000 tonnes in 2011 to nearer 280,000 tonnes in 2012 on the back of a “sharp decline in the second half of this year”.

He went on to express the hope that the proposed Outokumpu/Inoxum merger will be sealed soon “because there has to be consolidation” in a European stainless steel industry recording operating rates of 60%. This merger alone, if it goes ahead, will not be sufficient to solve Europe’s overcapacity issue, he observed.

Non-ferrous

Despite suggestions to the contrary, the scourge of metals theft and fraud is intensifying rather than diminishing, according to Robert Voss of Rickmans-worth-based Voss International at the non-ferrous metals round table.

Speaking in his role as chairman of the BIR international trade council, he revealed that his company has suffered six thefts from containers within the past three months. And while insurers have been largely sympathetic to recyclers over the theft issue, it is “only a matter of time” before they impose restrictions and higher costs on their clients in this sector, he warned.

The BIR non-ferrous metals division has commissioned CRU Strategies, the international management consulting division of the CRU Group, to gather statistical data on copper and aluminium scrap flows.

Speaking in Barcelona, the company’s managing consultant Christopher Stobart said the scrap industry in the pivotal Chinese market will grow to become “a bigger business”, so international scrap traders will ultimately need to look for “new, growing export markets” such as in India, Brazil and South East Asia. 

Textiles

Trading conditions for the UK used clothing industry “are becoming increasingly difficult”, according to Alan Wheeler, national liaison manager at the Textile Recycling Association (TRA).

Growth in used textiles values has “tailed off” and there has even been “a small decline” in certain instances, he told delegates to the BIR textiles round table.

With businesses struggling, the expectations would have been for prices “to drop more substantially,” he warned.

“Part of the reason why this has not happened yet is that people are continuing to enter into the industry because they think they will make a quick profit,” he said. “We are receiving more and more enquiries from individuals who have started up a so-called clothing and textile collection business and do not have a clue as to what to do with the items they have collected or indeed how much they are worth.

“Only after they have been trading for six months or a year do they sometimes realise they are not making any money and move on to something else.”

The problem, he explained, is that these collectors are taking supplies of used clothing from established businesses and so values are remaining high.

Plastics

The usually optimistic BIR plastics committee chairman Surendra Borad of Belgium-based Gemini Corporation perceived “black clouds on the horizon” for the international plastics scrap trade owing to, in part, strict enforcement of import regulations by the Chinese authorities and the ban on shipments of plastics from Europe to Malaysia.

He added out that Chinese import licences were due to expire at the end of December and any renewal delays had the potential to “upset the market tremendously”.

Having described overall exports from Europe as “stagnating”, Borad pointed out that 6.4 million tonnes of the 25.1 million tonnes of plastics scrap generated across the continent last year were destined for recycling, including three million tonnes within Europe and 3.4 million tonnes elsewhere.

Tyres

Next year will see work take place towards determining end-of-waste criteria for end-of-life tyres (ELTs). According to BIR tyres committee chairman Barend Ten Bruggencate of the Netherlands, the removal of ‘waste’ status for ELTs would create an estimated added value for the business of “at least e1bn (£800m)” during the next 10 years.

“At present, ELT-derived products have to be managed as waste even though they are going to be recycled or to be remanufactured,” he said. “The waste status is a huge burden which adds significant costs over disposal and, in many cases, acts as a barrier to improved resource efficiency.”

The European Tyre & Rubber Manufacturers’ Association is seeking end-of-waste status not only for ELT rubber-derived fractions but also for casings suitable for retreading.

A review of the BIR paper round table in Barcelona will appear in our recovered paper Special Report in the next issue

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