German Deposit Plan Could Curb Scrap Metal Collection

German government plans to impose a deposit on drink cans could hit metals demand at least in the short term, German metals traders said.

Scrap availability could also be hit if retailers and drinks manufacturers increase bottled drink sales and reduce can use, traders said.

The hotly contested issue of a can deposit returned to Germany's political agenda this week when Environment Minister Juergen Trittin said retailers and manufacturers had failed to meet Germany's statutory minimum requirement that 72 percent of drink packing should be multi-use.

The total fell to only 63.8 percent in 2001 largely because of increased sales of beer and other soft drinks in cans, making littering of German streets with beer cans a common sight.

Trittin said the government would impose a deposit of 25 euro cents on cans and other single use containers of beer, mineral water and soft drinks from January 1, 2003.

Imposing the deposit would also depend on the Social Democratic/Green Party government winning Germany's parliamentary general elections in September this year.

The opposition conservative/liberal coalition, currently leading in opinion polls, has said it will stop the deposit.

"The plans would be imposed in a very short time-span and this would obviously encourage drinks makers to use more bottles than cans," one metals trader said.

"They already have substantial infrastructure in place to recycle bottles and in the short term at least they would probably see this as the cheapest way forward."

"The deposit would reduce the price advantage cans have over recycle bottles, so weakening long-term can use as well," another trader said.

"This would in turn reduce scrap availability if more cans receive multi-use instead of going one-way for recycling as metal."

Main metals to be hit would be steel and aluminum. "About 80 percent of German cans have a steel body and only an aluminum lid," another trader said. "Only around 20 percent of cans are all-aluminum."

"In overall terms I do not think the market would be badly hit by a fall in aluminum use caused directly by any deposit because the proportion of aluminum is so low."

"But obviously this would not be good news when general aluminum demand is so low."

If German drinks makers increase use of reusable cans aluminum would then have a chance of increasing market share as a can material in 2003 as it is more suitable for direct re-use than steel-bodied tins, he added. Reuters