Eurometrec Reports On Nonferrous Scrap in the Benelux Region of Europe

Suddenly, in April a significant decrease in the offers has been noticed in the Benelux and in the rest of Europe. Were they preliminary signs of a worldwide economic recession?

The offers and demands for nonferrous and ferrous items were significantly weaker during the summer holiday. On top of that, it was seriously hit during the first half of August due to the economic recession.

The question is now: in one way or another, will the base metals see a seasonal lift of activity during autumn, traditionally, a period of year that should see post-holiday demand reinforced by restocking?

In Belgium, the majority of the copper consuming factories report having sufficient stock; or do they prefer to buy “on fixation” rather than “on spot” in order to spread their buyings, and in a same way, spread their cash payment movements due to the high LME Copper quotations?

Even though the global demand is raising these high prices, they are, as usual, influenced by the activities of speculative hedge funds.

At the same time, export market to China is still present, but not in a vivid way. China prefers to opt for a wait-and-see attitude in anticipation of possible lower Cu prices.

Scarce quantities of brass are available in Belgium and a steady demand from the export markets.

Due to the continuous increase of the stocks of primary material, the LME aluminium quotation dropped significantly during the summer period.

There is definitely not enough physical off-take for that flow and, consequently, the quantities of primary metal lying in the warehouses will increase.

There are sufficient quantities of low grade scrap aluminium available in Belgium, whereas high grade scrap materials are more difficult to obtain.

Secondary aluminium smelters are fully booked until the end of this year, due to the fact the aluminium scrap in principle or mainly is covered, the aluminium scrap prices are under pressure.

Secondary ingot prices are more or less stable, because of long delivery terms from smelter side. The total expectation is weak, because of actual LME losses and negative outlook for next year and due to the fact, that lower consumption worldwide is expected.

Primary aluminium producers are much more negative, because order volume lost 20% in packaging, building, printing and other industries. Also for next year, they expect lower demand due to the worldwide negative expectations. Aluminium scrap prices therefore in the sector are under pressure, also premiums and sales prices.
Car producers, i.e. in Germany especially for premium products are still positive, but this situation can change rapidly, if international financial markets are performing losses or financial crises in USA and Europe will increase and demand therefore will decrease.

All over Europe there is already recession-situation, also due to the very bad financial situation of the various countries.
Nevertheless, it is very exciting, because global thinking and acting worldwide means also high risks because of no homogenous parameters.

In the Benelux, quite some quantities of soft lead are stocked amongst scrap-dealers, who consider this product as an interesting speculating item, which, moreover, needs little space to stock.
We notice a rather vivid climate on battery-prices created by the various smelters. The exporting markets reveal sometimes surprises as to their interest in buying soft lead.

How the price will develop is very hard to say, will the recession come or not, the lead smelters expect that on the long run the price could rise. Also the copper quotation is important for this, the $/¤ value is sharp. There is enough material available on the market and Uzimet/Calder group can buy good volumes. Also China/India route are not buying everything that is available on the market which helps to stabilize the European market.

Due to a sudden decrease of the Stainless steel scrap prices recently, many scrap-dealers have still important and too expensive stocks. There are some reasons to believe that the stainless steel scrap prices will still be under pressure in the near future.

Somehow difficult to find old zinc scrap in the Benelux, as it is also a product, (like soft lead) that the scrap-dealers like to ‘sit on’. Belgian zinc smelters prefer to keep their purchases as low as possible without compromising their immediate production requirement.

The demand for zinc is a little bit better, especially in Asia for the EU it’s not that good. The galvanizing business is also a little bit better although the construction and building section a preforming not that good at the moment.  The expectation is that LME zinc can grow to $ 2.400/ton (3 months). The Dutch market is stable to our opinion, the national producer Budel Zinc its products are sold by Glencore worldwide.

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