Ferrous market ‘unlikely to recover until 2024’, BIR reports

In a report published on 12 October, metal recyclers from across Europe, Japan and the US all reported that the scrap market is being hit by the demand for new products reducing becuase of tough economic conditions.

This was summarised by the chairman of the BIR’s ferrous division, Denis Reuter, who said “recovery now is unlikely before end of first quarter 2024.”

He said: “The global economy weakened further in the third quarter, particularly in the Eurozone which is facing a renewed recession. The German economy, which has the greatest weight in the monetary union, is suffering from a sharp decline in industrial activity as well as weak construction levels.

Mr Reuter added: “Continuing high inflation in the world’s major economies poses another challenge. To combat this, major central banks have sharply raised key interest rates and signalled their intention to continue with this approach if inflation cannot be contained. However, this has inevitably had a negative impact on private consumption and investment in construction, both of which are important drivers of economic growth.”

UK

This sentiment was echoed by the UK representative, Shane Mellor of Mellor Metals and board member of the BIR Ferrous Committee.

He highlighted that in the UK there is a “scarcity of available material for merchants” and the British economy is battling inflation despite the fact interest rates have eased slightly with figures showing 6.7%.

Mr Mellor continued: ”Together with the ominous legislation which will further burden the recycling business sector with unworkable environmental proposals for current metal processes, these factors are creating an increasingly tough landscape for metal recyclers.

“To keep abreast of the fast-paced changes being experienced and imposed, let alone the investment and necessary time to comply, the cost of producing furnace-ready material has probably never been higher.”

Mr Mellor added that “the impact of these costs is being exacerbated by the lack of available material, pushing up the overall per-tonne processing bill.”

Demand

Elsewhere in Europe, Mogens Bach Christensen of Danish firm H.J.Hansen Genvindingsindustri A/S also said inflation had hit the industry and added that some suppliers had seen a decline of 30%.

He added “There is a close connection between inflation, interest rates and activity levels, and thus the production of recycled steel. When European interest rates are rising sharply, as is the case now, this dampens industry’s desire to invest and consumers’ appetite to spend on cars and other major goods. Therefore, the logic is that falling interest rates are required before recycled steel supply returns to normal levels. Hopefully, this will be during 2024.”

International

Away from Europe, Ted Taya of Japanese company Shinsei Scrap CO LTD (JPN) reported: “that the steel markets remained firm during the summer of 2023.”

He explained: “There was a move to lower purchase prices but this was limited to minor numbers. Most customers maintained the prices that had been revised downwards in mid-July; thus, domestic prices continue to hover at a high level of Yen 50,000 per tonne”

Mr Taya added: “According to the Ministry of Finance/Trade Statistics, Japan’s recycled steel export volumes amounted to 567,507 tonnes in August, an increase of 0.1% from the previous month and of 14.6% from the same month last year. Although it was the fourth consecutive month of growth over last year, the total fell below 600,000 tonnes in both July and August after reaching a 2023 peak of 638,057 tonnes in June.”

‘Fanfare’

The USA has reported that the “the third quarter ended with little fanfare.” With the American representative George Adams of SA Recycling saying “a lacklustre second quarter typified by the summer slowdown, the ensuing three-month period began with the same low levels of enthusiasm.”

He added: “The best news of late has been the US government narrowly avoiding a shutdown, which came on the heels of week number three of the United Auto Workers (UAW) strike against the three major US auto manufacturers. Those dynamics were set to be negative impacts on recycled steel/steel markets that were already in the doldrum”.