Nonferrous Scrap, Europe

The Norwegian Industry and off-shore sector generate scrap material as normal. Low temperatures since October combined with partly heavy snowfalls influenced volumes of incoming material during the period.

Veolia, the leading company within Norway’s waste and metals market, was sold to Altor. Another waste management company, Veidekke Gjenvinning, was also purchased by Altor a few days ago.

The general economic situation in Sweden is the best it has been in many years. The BNP growth the last quarter of 2010 is estimated to be higher than 7%.

The nonferrous metal market in Sweden is normally quite active during the winter season, as this is indoor activity. In spite of that, the activity this year is lower than normal in spite of the high prices and good demand. In general terms you could say that the availability is remarkably low as the economy is at a record strength.

The upward LME quotations which began last autumn have continued their course until now, with quite some volatile tendencies as well.

For the Benelux nations, nonferrous metal scrap did not fall regularly, and it is mainly since the third week of January that there have been few offers. As on the ferrous items, the aggressive buying of December and early January has been followed by a period in which trading has reached almost a full stop.

Now the market appears to have paused for breath, but with low stocks and tight availability it is hard to believe in a decrease of prices. Due to the high prices, many thefts are reported in the Benelux nations. On the other hand, in Germany the secondary aluminium smelters are full with material, orders are already somewhere in the May delivery period.

There was a strong influence on the scrap markets as Chinese clients bought less from Europe and the U.S., and so European works could lower the discounts substantially and still receive lots of scrap as it was also shipped from the U.S. across to Europe. Works have told suppliers that other than amounts under long-term contracts, they would not accept any spot material before the third quarter. There are large quantities at the works waiting to be processed. It is not quite clear if the Chinese behavior is tactical to achieve lower prices so that they have to stock up later at some stage, or if general demand is lower.

Copper

Last month, we saw a high volatility on the LME for speculative metals, in particular copper prices. While the short-term outlook has weakened, long-term fundamentals for copper remained good, with a supply shortage expected in 2011.

We paid this volatility with a very low demand of the national and EU consumers that are scared by the sudden fluctuation of prices. Main buyers of semis are waiting to buy at better conditions. On the other side, main refiners are buying only what they need to cover their orders—everybody keeps the stock at low level. The physical copper supply is very good: scrap is around in abundance and the discounts are quite high. The main issue is the lack of demand by the main consumers of top quality products, and it's quite hard to get the right prices. The situation is slightly better in Northern EU refineries. Main Italian scrap dealers are selling most of their production in foreign markets. On the low-grade materials, the Far East prices keep the best of the market. During the last few months we saw a development of lower Chinese copper demand on international metals and scrap markets. This was visible through the price difference between the Shanghai Futures Exchange and the London Metal Exchange. Since November, Shanghai prices have ranged from $ 160 to $200 below the LME. This led to an increase in LME warehouse stocks in the Far East as metal directed to China was moved into warehouses instead.

For the Nordic countries, a lot of material stays there (Sweden). 

The overseas market in this period looks really quiet, but we expect that demand in China will pick up. Maybe in March or in the second quarter we'll see a stock drop; demand of copper usually picks up in spring as construction activity increases. Although the export markets have been less aggressive this year in the copper scrap market, the supply of copper scrap is sufficient within Europe and processors have full warehouses.

A few words about other semi-finished materials: wire producers are now working at full capacity, pipe producers are slightly better than last month, and the demand of bars and stripes is discrete.

Brass

If you are the lucky owner of a load of yellow metal (brass) of any quality and shape, you have to forget Italian refineries. In fact, brass is a “dead” metal in the Italian market, the availability of scrap is good, but there isn’t high competition to get material.

Italian scrap dealers are luckily exporting a great part of their production in Far East markets, which look really active; this is the only magic formula we know to fight the volatility of prices. The importation from other EU countries of brass is “dead” for the Italians. However, the brass scrap is consumed domestically in Sweden in fairly good volume. They have problems with availability because the demand is higher than what there is. Norway is exporting it also to Sweden, as well as to China and to Belgium. 

However, the outlook for the near term is not so bad thanks to export markets. It is a little harder to guess when Italian consumers will come back to life; we hope for a new rise in prices and demand in the national market from the end of the next month.

Aluminium

The LME Aluminium price wasn't influenced by the volatility of speculative metals in the last months. LME Aluminium premium prices were stable in this period. The Italian scrap market looks strong because of the huge demand of main producers of secondary billets and plates. All the producers of primary alloys have sold all their production for the first semester. On the low grades, the prices we heard on overseas markets are slightly better than Italy’s. It causes a stable outbound flux of scrap through new markets.

On aluminium we have seen Shanghai Futures fall to nearly $400 below LME. This is equivalent to the 15% export duty China has imposed three years ago to prevent producing aluminium for the world market. The current development could mean that China will restart exporting primary aluminium, with its own implications for international markets.

The secondary aluminium market is getting worse in Europe. The availability of scrap is good, but prices suffer for the lack of demand by the main consumers, who also postpone deliveries of standing orders. The mixed turnings market in Italy is full too; slowing down deliveries is the U.S.

However for Italy, a bad rate of exchange between Euros and the U.S. dollar reduces exportation. At the moment, the main scrap dealers, following the behaviour of foreign traders, are selling their product mainly on EU market. Unlike Benelux, some volumes are exported to emerging countries.

Nickel

The purchases of nickel-based stainless steel scrap at high prices committed by specialized stainless steel mills have stimulated the market for this scrap.

The LME nickel price once recorded a high level of $30,000 per tonne as a momentary velocity. Following this rise of the LME nickel price, the domestic price of nickel-based stainless steel scrap in Italy has maintained a basic tone to have a further rise. The domestic prices of common 304 scrap is €2000 per tonne. The Italian demand looks quite good by the main consumers. In Austria, the prices are not following nickel too much because too much scrap is on the market and steel mills are lowering their prices. Austria is selling to Germany and Italy.

Lead

Fundamentals for lead are still good, despite that there are several bad forecasts about the trend of this metal in the short-term. In particular, zinc, lead and nickel are the metals with the worst fundamentals and are getting sold more aggressively during this risk-aversion period. However on the real market, there is high scrap demand in the Italian market. The availability of scrap and re-melted ingots are muted. Prices in the foreign market are as usual better than in the national one. This has stopped the importations.

In the northern countries like Sweden, lead scrap and used lead acid batteries are consumed more than the local availability, so the consumer is looking for more material from neighboring countries to import, without any larger success, even if they pay very high prices. The Swedish secondary lead smelter can only produce at 80% of its capacity due to lack of availability. In the Netherlands, we are still in a war zone. Due to not having a domestic secondary smelter, prices are very high (the highest of Europe). Global players like Ecobat and JCI and the European player Recylex are fighting for material. It seems, at least in The Netherlands, that everyone is allowed to get access to the material.

The lead acid battery scrap market is of course over heated, and it is important that our members can compete in a fair market.

WEEE

In Sweden, low-grade copper scrap and precious metal-bearing material is consumed by the Rönnskär work to a much larger extent than what is available in Scandinavia. Large amounts of electronic scrap are imported to Sweden. Illegal exporting of material was in focus during last autumn and “take-back companies” were heavily controlled. Illegal activity was exposed, but penalties and consequences were not very strong in Norway.  Also, in the Netherlands these subjects are under daily control, the Dutch system NVMP has renamed it’s organization into Wecycle.

Unfair trade and theft

The major event of 2010 in the Hungarian scrap market was the introduction and enforcement of the 2009.LXI metal scrap trade law. There was a detailed report presented about this law during the last General Assembly.

Unfortunately, there are plans to hand over investigative jurisdiction of the metals law to local police forces. This creates a situation where daily purchase and sales reports are sent to one administrative body but the local enforcers do not have access to this basic information.  We are also concerned that local authorities will not have the resources to effectively battle the black market on a national scale.

The Hungarian Association is currently communicating our concerns about the change of jurisdiction to the Customs Authority and the legislative body. 

The Hungarian Association kindly requests the assistance of Eurometrec regarding inclusion of reverse-charge VAT (value added tax) on scrap in the EU accession treaty with Croatia. As Croatia lies directly on our border, the Hungarian scrap market would immediately feel any scrap movements taking advantage of cross-border VAT fraud with Croatia.

Since the institution of reverse-charge VAT in 2006, Hungary has suffered from illegal outflows of scrap to markets where VAT fraud is possible.  Unfortunately, the trend of non-documented sales, price distortions, and a criminalization of the markets is constant.

Johan van Peperzeel can be contacted at jh@vanpeperzeel.nl