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Markets - Non-Ferrous 29 March 2014

Political unrest in the world, particularly the Russia-Ukraine hiatus, are being blamed for continuing uncertainty in the non-ferrous markets.

According to Robert Stein, president of the non-ferrous division of the Bureau of International Recycling (BIR): “Prices for metals fell victim to new-found unrest in the world, reminiscent of the Cold War rhetoric that we thought was long past”.

Stein, writing shortly before Crimea was absorbed into Russia, added: “Extraneous dynamics continue to influence metals markets and the flow of scrap metal from source to furnace. Emerging markets are faced with difficult times for economic factors far beyond their borders with the dilemma of a lack of new projects being inaugurated, decline of their currencies on international markets, and the inability to raise interest rates in defence of their currencies at risk of stifling domestic economic growth.

“These factors, coupled with their short - and long - term implications, make predicting our business difficult.”

Stein said the coming months, which typically represent the period for the highest demand for metals, “are shrouded within the backdrop of continued uncertainty”.

He was writing in the latest ‘BIR World Mirror’ which includes perspectives from around the world.

China

David Chiao, vice-president of Uni-All Group Ltd, an American brokerage company, introduced his section with: “the clouds hanging over the non-ferrous market are just like the heavy smog clinging to Beijing”.

Chiao said lower production indicators in the China was a major concern and last year’s Operation Green Fence caused had many scrap processors to close their doors, both import and domestic.

“Following Operation Green Fence, Chinese Customs inaugurated another initiative: Goddess of Great Earth, a customs alliance involving more than 40 countries to monitor hazardous waste crossing borders. According to Chinese customs figures, copper scrap imports fell 19% in January when compared to the previous month. Major industry preoccupations include the

slowing-down of real estate development, mortgage tightening, and the devaluation of the Chinese RMB (currency) convinced copper and aluminium scrap buyers to stop and wait”.

He also pointed out that up to 300 accreditations under China’s quality control system – known as AQSIQ - were rejected at the turn of the year because the authorities were not satisfied with the legality of the operators’ businesses.  

“My biggest surprise when visiting Beijing was that the local customs bureau was not aware of the theft problem that has affected the southern ports of China for all these years,” he said.

India

Dhawal Shah, managing director of Metco Marketing, also reported in political uncertainty ahead of the Indian elections which begin on 7 April and conclude in May.

He wrote: “Automotive and consumer goods output has seen considerable shrinkage whereas demand for non-ferrous scrap from secondary producers has been high. This does not mean that secondary producers are making bumper profits as operating margins are still under tremendous pressure; instead, this is largely due to poor domestic generation and the low inventories at factory level.

Shah noted that China’s appetite for scrap had waned and this could provide Indian buyers with an opportunity to source good deals while local demand remained strong.

Europe

One European perspective came from Fernando Duranti, a consultant for Tzimet SPA in Italy. He wrote “General scrap exports have been influenced by lower prices but, above all, less interest from China. Prices are so low that the simple addition of sea freight makes them seem exorbitant and the few domestic prices obtained from consumers were either on the same levels or slightly higher”.

Ola Eklund, a director of Kuusakoski OY, was more positive, writing: “The long-awaited economic turnaround in Europe seems to be taking place in the early months of 2014. The main positives are growing external demand and industrial production.

“Industrial production fell 3.4% in 2013 for the second consecutive year of decline, something which has not happened since the early 1990s. The good news is that this decline is levelling off and that industrial production is also turning positive in 2014.”

  • The next convention of BIR takes place in Miami from 2-4 June. for the first time, it includes an international summit on textiles, with representatives from the BIR’s Textiles Division, the Secondary Materials and Recycled Textiles Association and the Council for Textile Recycling.

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