I think that in the beginning of the year there’s been ample activity, with some old stock probably wanting to leave the yards. Now, things are getting back to normal, subdued due to the fact that China has been out of the market for some time. The Chinese New Year stops a lot of activity in China and, of course, has a big influence on the market. We see also the enormous development that LME prices have made. People are very suspicious every time there is a big rise in prices. People are waiting to see if it holds and maintains. In general, stocks are low.
When we look to copper, the situation has become a little bit better. People can decide to hedge their material at the exchanges without being punished for taking their time. That means the pressure in the short term of getting rid of material is at least a little bit eased. I think aluminium is still in the doldrums. The market is well supplied so there are no shortages anywhere.
The weather in the later part of December and first part of January affected intake, but now temperatures are above freezing again for the last two weeks. That has really taken away old barriers in terms of the arisings. That has not been an influence.
Germany is doing well. Industrial production in Germany is good. Order books are full. We see that also the aluminium works, copper and so forth have full employment and full capacity. What is lacking is the consumer market. I think consumers are still cautious, so they are not doing a lot of replacement investment. We have had a lot of promotion programs in the last couple of years where we are taking back the old cars and being subsidized by the government. Those programs have all disappeared and that has had an effect on the sales of new cars. Year-over-year sales of cars in Western Europe are down. People replaced their cars in 2009 and 2010 because these subsidies from the government were there, but these all ended in the middle of 2010. Therefore, at the moment the car market is suffering a little bit because of that. Having said that, it is obvious that the car market in Asia is very active. We have people like Volkswagen, Audi, and BMW having 30-to-40% growth rates still in China, so that part is still growing.
I think markets have become quite in sync with reality. Where we are today is what real value is. We had been going through a time when stocks in China were very high. China was very much buying. That changed from the middle of last year with a lot of restrictions being brought in by the Chinese government. They have had a major effect on the buying power or the buying hunger of Chinese markets for scrap. Having said that, now stocks are pretty low. Therefore, I think there is no reason to be pessimistic. It is obviously linked to what the exchange price is for metal.
If I looked at a physical situation on the scrap market, stocks especially in copper and so on are pretty low.
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Anton van Genuchten of Reukema Recycling can be contacted at a.vangenuchten@reukema.com.