Copper demand navigates turbulence of 2020

Every national economy faced at least one bout with COVID-19 in 2020, but global demand for copper remained relatively strong and is poised for a surge in late 2020 and into 2021, according to presenters at a webinar on the copper market held by Waste & Recycling Middle East magazine Sept. 14.

Panelist Mayank Pareek of Chennai, India-based Jain Metal Group said in pre-COVID-19 conditions India produced 1.1 million metric tons of copper in its 2019-2020 fiscal year, of which 300,000 of that was secondary product made with melted scrap. (India’s fiscal year runs from April 1 to the following March 31.)

Pareek said India’s 70-day lockdown this spring caused India’s gross domestic product (GDP) to contract by 24 percent during the fiscal year 2020-2021 first quarter. He said Moody’s Analytics is predicting 10.5 percent GDP contraction in India for the entire fiscal year, but even through that copper demand may fall by only 5 percent.

India’s government is showing a willingness to spend on infrastructure in late 2020 and into 2021, forming part of what Pareek expects to be “suppressed demand” for the red metal in that nation. The government also is planning to monitor finished nonferrous metal imports, which could lead to less imported finished metal and more domestic Indian production.

This matters to the rest of the world’s metal recyclers, noted Pareek, because the 300,000 metric tons of secondary copper that were made last fiscal year in India required 150,000 metric tons of imported red metal scrap. Any boost in copper and brass production in India will likely mean additional sales opportunities for recyclers in North America and Europe.

In the Gulf Cooperation Council (GCC) nations, comprised of Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman, economies have been hurt by the suppressed global demand for and price of oil. Salam Sharif of UAE-based Sharif Metals said “it wasn’t a very pleasant half of the year” in the GCC region in the first six months of 2020.

Recyclers in the region who had red metal to sell had “the options to swing metals either to the Asian side or to Europe or to domestic consumption,” depending on where buyers had appetites, said Sharif.

Ideally, the worst is over in the region, said Sharif. “The market here in the Middle East is getting slightly back to normality. There will be a lot of demand for metals here; [electrical] cable companies seem to be running into next year with full orders,” he commented.

“In general, the secondary copper recycling sector is doing well,” stated fellow panelist Nikaloy Gushevilov, who buys copper-bearing scrap in the Middle East and southeast Europe for the Belgium-based Metallo Group. That firm merged in mid-2020 with Germany-based copper producer Aurubis AG.

Gushevilov said his company had been securing supply for the year’s final quarter “in case there is another lockdown ahead.” Traders in Europe and elsewhere, he said, also have tried to “catch up on lost volumes” after the slow spring and early summer, “but the industrial scrap supply was lagging; we hope it picks up in October and November of this year.”

Remarking that COVID-19 had “created havoc and worries” this year, Gushevilov said Metallo took necessary workplace safety measures but then was able to operate fully during the lockdown. “Thanks to the global footprint of our company, we managed to secure the quantities [of scrap] needed to operate the whole time; the first five months [of 2020] were very good for our company,” said Gushevilov. He said China’s strict quotas on scrap imports also worked in Metallo’s favor.

Looking ahead, the scrap buyer said Metallo will continue to “fine-tune” its processes to respond to changes in the scrap stream, “such as switch to lead-free alloys in potable [water plumbing] applications.” Those alloys now often contain bismuth.

Gushevilov also said regulations in Europe and elsewhere “will become more and more strict,” and scrap suppliers of drosses and residues “will have to [provide] additional documentation,” with certain metals requiring disclosure if they are present.

Dubai, United Arab Emirates-based Waste & Recycling Middle East will next be presenting a Virtual Forum series webinar on recovered paper markets.