NONFERROUS SCRAP>>WESTERN EUROPE>>
Anton van Genuchten, Reukema Recycling
Predominantly for nonferrous metals at the moment, volumes are very low and scrap recyclers are suffering from that. The lower volume has to do with prices going down and the general economic conditions that are occurring around the world.
I think the insecurity we’ve had in the last couple of months in the global economy has people doubting or thinking we might have a double dip. This has not been good for business confidence. It means also that everyone is keeping their horizon fairly short and, therefore, stocks at very low levels.
On top of that, there is a very noticeable worldwide credit crunch. We know that the Chinese government has ordered the banks to keep more reserve funds and on top of that has changed some laws regarding loans and reserves for the private real estate market. Obtaining funds has become more difficult around the globe, and once again within the scrap market payment discipline is not what it should be, i.e. it's deteriorating.
Margins remain normal for smarter operators; it doesn’t make sense to start working for less margin simply because you can’t get the volume. But any scrap that arises is being fought for by a number of companies, and there is a natural tendency for margins to get a squeeze in these circumstances.
Summer has brought with some recovery in prices, and that has put some life into the market. But you also get people hoping and wishing that the price rise will continue and holding on to their material. At some point re-stocking will need to take place because, as mentioned, stocks in the pipeline are regarded to be low.
Demand for scrap in Europe is up and, relative to other continents prices are getting better--but not booming in any sense. Currently, more material is staying in Europe than previously.
I think this overall situation of fear or insecurity and low arisings of scrap are the things to watch. Part of the definition of panic is that it doesn’t last long. Will we go back to daily business and will things pick up again? Lack of confidence and long-term horizons are currently big factors.
Anton van Genuchten, CEO of Reukema Recycling in the Netherlands, can be contacted at a.vangenuchten@reukema.com.
NONFERROUS SCRAP>>MIDDLE EAST
Salam and Ahmad M. Sharif, Sharif Metals
We have had some ups and downs in the nonferrous market. There has been quite a real drop in pricing during June. The Chinese have been revising their import prices.
Copper and aluminum prices dropped, and a lot of people have been holding onto some of their stockpiles, while others have had to let go. The overall sentiment is quite wary.
The generation of nonferrous materials slowed down toward the end of June. As the market goes up it brings supply. But when it is down, all of a sudden people seem to hold back and they only need to sell what they think is good enough for their day-to-day requirements in the anticipation that the market will go back up.
However, large companies are investing in the Middle East and governments also have been privatizing some industries, resulting in construction projects and the generation of scrap at these building sites.
On the ferrous side, we can say our three shredders are not running at full capacity. Supply has dropped off and steel mills have backed off on their buying prices in anticipation of summer holiday. The flow has dropped off by almost 10 to 15 percent, we would estimate.
We move some of our ferrous scrap to Turkey, but the majority of our containers go to India and some of the other Asian markets. Container rates have become lower on the Far Eastern routes, but not on the other ones.
Jordan has banned steel scrap from being exported, while nonferrous scrap shipped from the port of Aqaba, Jordan, is subject to a $40 per tonne export fee. The better news from Aqaba is that the port is undergoing an expansion and modernization project.
The BIR and its delegation to India a few months ago have managed to smooth out some of the regulations that had affected shipping to India. The bigger hold-up has been at the Chinese ports, where regulations and inspections looking for more than one material per container have been taking place.
It is difficult to be optimistic for the third quarter of this year in terms of prices. But the fourth quarter may be something to look forward to and we should see some improvement by then.
Salam Sharif can be contacted at salam@sharifmetals.com.