We have grown so accustomed to a volatile business environment over recent times that the greater surprise would be to report a year of relative calm. In the event, 2018 followed the pattern of many of its immediate predecessors in giving us choppy market conditions, characterised by generally declining prices and a simultaneous downward drift in trading volumes.
If we take aluminium as an example, the light metal started 2018 above US$ 2200 per tonne on the LME and climbed to just short of US$ 2600 by mid-April before leaking value throughout the rest of the year to end at its lowest point below US$ 1870. The trajectory for copper was similarly dramatic: the red metal’s LME price oscillated between US$ 6500 and US$ 7260 per tonne before nosediving from this high point to below US$ 6000 in a matter of six weeks during the middle of the year, ultimately dipping as low as US$ 5822 before closing out 2018 at around US$ 6000 once again.
To add a further element of disturbance to these turbulent market conditions, the non-ferrous scrap sector – like many others – was forced to grapple with the consequences of the US/China trade war, which has had a destabilising effect on all markets while at the same time undermining business confidence around the world.
Of a more direct impact, the Chinese government continued to drive home its policy of tightening scrap import controls. Indeed, one of its final acts of 2018 was to switch eight types of waste and scrap – including copper and aluminium – from its “non-restricted” to its “restricted” list for the purposes of importation. I would stress that BIR continues to work with China in support of the interests of its membership, liaising with the CMRA and with the Chinese authorities in a bid to achieve non-ferrous metal category definitions that allow trading paths to remain open wherever possible for our secondary raw materials.
With China seemingly determined to close its borders to most forms of mixed non-ferrous scrap, we must necessarily devote more attention to locating and supporting alternative destination countries.
India is often mentioned as a massive market with huge potential to use imported materials but, in 2018, its government limited such opportunities by tightening business lending. Meanwhile, several countries in South East Asia provided useful homes for some of our materials. However, we remain mindful of two factors: firstly, none of these nations will ever come close to matching China in terms of the volumes they are capable of consuming; and secondly, many of their governments are following the lead of China by introducing stricter import controls. As I wrote in our Non-Ferrous Metals World Mirror back in May last year: “How many more years will these new markets last before they follow in China’s footsteps if we don’t pay attention to our quality and environmental consciousness?”
These issues were considered in depth during our meeting in Barcelona last May, not only by our guest speakers Josep Berdejo of the La Farga metallurgical group in Spain and Ion Olaeta, President of Spanish recycling association FER, but also during an excellent panel debate in which it was noted that, for example, Thailand had already imposed import bans on certain forms of electronic/plastics scrap and that regulatory changes could be expected elsewhere too.
Another panel debate at our London meeting carried forward this discussion of the Chinese market and potential alternatives. The gathering also provided an opportunity to assess the market roller-coaster ride triggered by the US-China trade war; our eminent guest speaker, Edward Meir of Commodity Research Group, dismissed the use of tariffs by both sides as “a very blunt instrument” prone to delivering unintended consequences, such as “chilling” business investment and cancellation of projects.
BIR remains fundamentally opposed to tariffs and similar instruments that stand in the way of our long-cherished principle of free and fair trade. Unfortunately, however, they have become an increasingly strong presence in today’s international trading environment.
Indeed, our trade will face ever stronger headwinds in 2019 if the dispute between the USA and China either remains unresolved or, worse still, deepens. The latter weeks of 2018 and early weeks of 2019 have brought a more conciliatory tone to discussions between the two nations, so let us hope a solution can be found that serves all our interests.
by David Chiao
Uni-All Group Ltd (USA)
“ With China seemingly determined to close its borders to most forms of mixed non-ferrous scrap, we must necessarily devote more attention to locating and supporting alternative destination countries.”
The most commonly used non-ferrous metals are aluminium, copper, lead, zinc, nickel, titanium, cobalt, chromium and precious metals. Millions of tonnes of non-ferrous scrap are recovered annually and used by smelters, refiners, ingot makers, foundries and other manufacturers. Secondary materials are essential to the industry’s survival because even new metals often require the combined use of recycled materials.
According to several estimates, the recycled non-ferrous metals market as a whole was worth more than US$ 90 billion in 2018.
Aluminium, which is the most abundant metal in the Earth’s crust, is one of the most recycled materials. Recovering aluminium for recycling is not only economically viable, but energy efficient and ecologically sound.
Owing to the limited availability of non-ferrous metals, the unrestricted flow of scrap from country to country according to industrial and consumer demand is crucial. BIR has consistently campaigned for the free movement of secondary raw materials to avoid shortages in certain geographical areas and surpluses in others. Import barriers could limit the supply to the manufacturing industry in some countries.
BIR’s major study entitled “Review of Global Non-Ferrous Scrap Flows” focuses on copper and aluminium. Owing to the industrial importance of both metals, there are very few countries in the world which do not trade in aluminium scrap or in copper/copper alloy scrap. The research reveals that scrap usage for copper - both for secondary refined copper production and direct use of scrap - increased worldwide by 41% from 5.9 million tonnes in 2000 to 8.3 million tonnes in 2015 (worth around US$ 46 billion at that time). Production of aluminium from scrap increased by 86% from 8.4 million tonnes in 2000 to 15.6 million tonnes in 2015 (worth around US$ 26 billion at that time).
Aluminium has enormous recycling potential and is often reused for the same application for which it was originally manufactured. Its strength, flexibility and light weight make it ideal for:
After silver, copper has the best electrical conductivity of all the elements. It is also a very good thermal conductor and is readily alloyed with other metals like lead, tin and zinc for foundry applications to produce, among other goods, products for the transmission of water such as valves.
Other common applications for recovered copper include:
Copper’s recycling value is so high that premium-grade scrap holds at least 95% of the value of the primary metal from newly-mined ore.
Recycling copper saves up to 85% of the energy used in primary production.
By using copper scrap instead of adopting the primary route, CO2 emissions are reduced by around 65%.