U.S. Slump Keeps Nonferrous Sector Tepid

A “fragile and depressed” U.S. economy could be leading to a pile-up of nonferrous inventories and reduced metals demand, according to one speaker at the late October Bureau of International Recycling (BIR) Round-Table in Brussels.

In his summary of the world market situation, BIR Nonferrous Division vice president Salam Sharif of Sharif Metals Ltd in the United Arab Emirates referred to the sluggish U.S. economy, and added that unimpressive growth rates in Europe have resulted in “hand-to-mouth” consumption despite a shortage of scrap there

Also noteworthy, according to Sharif, were interruptions to India’s scrap imports owing to customs declaration and tariff problems. Sharif sees China as the “main hope” for a base metals market revival

Guest speaker Giuseppe Lacchini, president of Cell-Data Information Systems in Italy, indicated some concerns for the longer-term nonferrous market. Like Sharif, he cited prospective continuing weakness in the U.S. economy and the nation’s high level of debt as concerns

Speaking from the U.S. perspective, BIR Nonferrous Division’s senior vice president Robert Stein of Louis Padnos Iron & Metal Co., Holland, Mich., noted that China remains a destination for much U.S. scrap

China’s appetite for scrap is “insatiable.” he noted, although its preference for buying on price rather than on value had resulted in some smaller U.S. scrap dealers “no longer sorting No 1 and No 2 copper.” Dealer margins could be affected because of plans by steamship companies to introduce cargo congestion surcharges that, in the short term, might double freight rates from the U.S. West Coast to China and elsewhere in Asia

Thomas Tumoscheit, of VAW-IMCO in Germany, noted that the shift in the relative values of the Euro and the U.S. dollar had reduced the attractiveness of aluminum scrap exports from Europe, particularly to Asia

The BIR as an organization is taking steps to smooth over the export process to Asia. A BIR delegation is planning to visit China in November to discuss the administrative difficulties facing imports of materials designated as waste, even though they may be recyclable. The aims are to build relations with the Chinese authorities, to assess how BIR can assist in monitoring environmentally sound practices, and to prevent “sudden” import bans or similar measures wherever possible

David Lo of David Lo Company Ltd., Hong Kong, has help set up the meeting, along with the China Nonferrous Metal Industries Association. Problems arose this May when a sudden ban on Chinese imports of all Category 7 scraps was issued. According to Lo, this measure cost nonferrous traders “a fortune” in demurrage charges and the cash flow snags

Lo noted that the Chinese authorities had recently formed “waste processing zones” in which all materials had to be unloaded and processed, one more sign that China’s rules and regulations on waste are generally considered “too long and complicated.”