A picture of ‘the recycling world’ beset by challenges because of COVID-19 has been painted by the Brussels-based Bureau of International Recycling in a second quarter report from its global Ambassadors.
In a report issued yesterday (24 June), BIR, which has a number of UK members as well as the involvement of trade associations including the British Metals Recycling Association and the Textile Recyclers Association, said that “demand is a major concern as activity levels remain well below normal”.
The organisation, which was founded in 1948, said that the quarter’s activities had been “utterly dominated by COVID-19, but some light can now be seen at the end of the tunnel.”
BIR explained that the pandemic has affected commodity markets in a variety of ways. “Companies’ operations have been disrupted by isolated outbreaks and government-mandated shutdowns, keeping demand low for many commodities and likely to remain so in the near term.”
It predicted that shutdowns and temporary stops could lead to an overall industry production loss as high as 40%. “Depending on the strength of the recovery, market shocks could mean the industry losing US$ 200 billion in earnings owing to the sales drop-off in, for example, the aerospace and automotive sectors. The impact has been felt by metals producers and hence by recyclers worldwide.”
On the metals front, BIR noted that secondary aluminium has been severely affected by the lack of demand for ingots from the automotive and aerospace industries. And it said that other recycling activities – such as paper and cardboard, plastics and textiles – are suffering as a result of oversupply and a lack of demand, not least because consumer confidence is very low.
Other problems including shipping difficulties, such as in Indian ports. The BIR Ambassadors said: “A major concern for recyclers in many parts of the world has been the huge congestion caused by thousands of containers lying in Indian ports despite free extensions by some of the major shipping lines. More disturbing is the fact that some buyers have abandoned containers, seeking deferment of contractual terms, unjustifiable discounts or even cancellation of contracts.
“This has put major worldwide suppliers in a “Catch-22” situation and has been described as an unwelcome echo of the 2008 financial crisis. Indeed, it is acknowledged from India that many shippers have lost large amounts of money as a result of buyers leaving containers or asking for discounts.”
Turning to Europe, the report noted that Germany has launched a decentralized, contact-tracing app to fight the virus when an expected second wave arrives but that meanwhile, “nearly everything has returned to normal – with some exceptions such as large events like concerts”.
And on the metals front in Germany there are some positives: “Step by step, scrap activities are returning. With the restarting of the automotive industry, supply noticeably improved in May and June. Transport within Germany is functioning but there is an expectation of lower water levels for several rivers owing to the dry period in recent weeks, and so scrap movements via inland waterways might suffer as a result.”
The UK report said: “The number of daily COVID-related deaths is slowly decreasing in the UK and lockdown restrictions are gradually being lifted. Most metals recycling companies are back at work but volumes are typically 50% down on this time last year despite the improvement in prices. Many companies still have staff furloughed; the fear is that, once this government-funded support is withdrawn totally in October, the recycling sector will be among those making redundancies.”
USA and China
Turning to the United States, the Ambassadors said that “On the whole in the USA, business is coming back slowly. However, the easing of restrictions has been complicated by more cases of COVID-19 as a result of increased exposure of participants at many of the protests held in the USA.”
On China, the report noted that “Most commercial activities have returned to normal, including metals recyclers, and demand in China appears to have regained much of its momentum in the secondary metals market. There are still concerns over the risk of a second wave of COVID-19 infections after a cluster emerged recently in Beijing, showing that vigilance is still required.”
Founded in 1948, BIR was the first federation to support the interests of the recycling industry on an international scale. Today, BIR represents over 760 member companies from the private sector and 37 national associations, in more than 70 countries. Together, these members form the largest international recycling federation. www.bir.org