2018 was proving to be “a very challenging year” for the scrap industry, according to BIR Non-Ferrous Metals Division President David Chiao of the Uni-All Group in his opening remarks to the body’s latest meeting, held in Barcelona on May 28. And some of the biggest challenges surrounded the US/China trade dispute and the tougher environment for scrap shipments to China – topics which provided the basis for a panel discussion entitled “Recycling and politics: a new era?”
Ion Olaeta, Director General of Grupo Otua and President of Spanish recycling association FER, set the scene for the panel debate. “The problem we all have is the uncertainty that’s really affecting our sector,” he said. “Today we have many questions but very few answers.” The reality of the situation, however, was that “trade flows are changing”, with a significant proportion of the materials that would have headed to China now redirected to countries such as Malaysia, Vietnam and India.
Political decisions were influencing trading dynamics “irreversibly”, said divisional board member Leopoldo Clemente of Italy’s LCD Trading SRL. With many mixed metal processors moving operations from China to ASEAN and Indian Sub-Continent countries, the key question was the timing and extent to which these other nations followed China’s regulatory approach to imports. “2018 is really a crucial year,” he stressed. During the panel debate moderated by Alejandro Jaramillo of Glorem SC in Mexico,
Chiao agreed with Clemente’s assessment: “This will be the key: what will be the environmental policies of the ASEAN countries.” Already, Thailand had imposed import bans on certain forms of electronic/plastics scrap and regulatory changes could be expected elsewhere too, he stated.
Michael Lion of China-based Everwell Resources Ltd, who is Chairman of BIR’s International Trade Council, drew a distinction between the political and regulatory dimensions to recent developments affecting Chinese imports: while the former was likely to be resolved at some point, regulatory issues in China were “not going to go away”, he insisted. China was looking to develop its domestic recycling industry more rapidly and domestic arisings were set to grow “exponentially”, he pointed out.
On the positive side of recent regulatory developments, the BIR Non-Ferrous Metals Division’s Senior Vice President Dhawal Shah of Metco Marketing confirmed that the Indian government had relaxed its approach by exempting metallic waste and scrap (shredded and unshredded) coming from the USA, EU, Canada, New Zealand and Australia from pre-shipment inspection certificate requirements, on the condition that shipments are cleared through the ports of Chennai, Tuticorin, Kandla, JNPT, Mumbai or Krishnapatnam. This move was in line with the Indian government’s push to make business easier and “should bring down costs”, said Shah.
The increased difficulties in shipping scrap to certain parts of the world have triggered recycling investments in many exporting countries. “Equipment sellers are very positive at the moment – some of them are booked out until mid-2019,” noted divisional Vice President Andy Wahl of TAV Holdings Inc.
The guest presentation of Josep Berdejo, Purchasing Director at La Farga metallurgical group, Spain, focused on the current and future developments in the domestic and global copper market. He foresaw no near-term shortage of copper scrap in Europe but, in looking to the more distant future, he contended that boosting the urban mining of metals “will not be easy” and that there was a need for new sorting methods and for “more investments in the recycling sector.”
FERROUS METALS: TURKEY’S ECONOMIC PROBLEMS IMPACTING PRICES
The Chinese government’s decision to suspend the issuing of inspection certificates for the month up to June 4 will cost US exporters an estimated US$ 400 million as well as a further US$ 100 million associated with market value and shipment diversions to other destinations such as India and South Korea, said Interim President Tom Bird of Chiho Environmental Group in China, during the latest BIR Ferrous Division meeting.
While ferrous scrap trading conditions had been largely “favourable” since the previous divisional meeting in Delhi last October, trade disputes have put many recyclers in a “precarious” position, he said in Barcelona on May 29. Europe has not been immune to problems, with “far more stringent inspection protocols leading to confusion and shipment delays”.
At the same time, the world’s leading importer of ferrous scrap, Turkey, has been encountering “very difficult” economic conditions, including the devaluation of its currency, and prices have headed lower as a result. According to Ferrous Division board member Frank Heukeshoven of TSR Recycling GmbH & Co. KG in Germany, Turkish sales of rebar have been slower both domestically and in the export market. George Adams of US-based SA Recycling expected scrap prices to soften further for June, at least in part because Turkey has not been in a position to buy its normal volumes.
Although demand for construction steel was likely to remain strong both before and beyond the 2020 Olympic Games in Tokyo, Japanese scrap price movements were likely to be “sideways” at best in the near future because of all the uncertainties affecting the market, said Hisatoshi Kojo of Metz Corporation. As for the India, Zain Nathani of Nathani Group anticipated that ferrous scrap imports into the region would rise “substantially” this year amid “vibrant” steel demand.
In delivering the ninth edition of “World Steel Recycling in Figures”, the BIR Ferrous Division’s Statistics Advisor Rolf Willeke highlighted growth last year in both world crude steel output and global steel scrap use, with China consuming more scrap than any other country with its total of 147.9 million tonnes. Earlier, Adams said China had installed or was in the process of installing 130 new shredders since the beginning of 2017, taking the country’s overall tally to more than 200. In the future, he added, China could need as many as 500 shredders.
On the same topic, Willeke observed in his statistical update: “Electric furnace production accounted for 6.5 percent of China’s overall steel production in 2017 but this figure is expected to climb over the coming years. As a result, further investments in steel scrap processing are planned, especially in shredder capacity.” He also noted that, worldwide, the global increase in basic oxygen furnace production last year (+2.3% to 1.228 billion tonnes) was eclipsed by growth in electric furnace production (+8% to around 445 million tonnes). “This is very positive for steel scrap use,” he added.
Jason Schenker, founder and president of US-based commodity and financial research firm Prestige Economics, delivered a typically entertaining guest presentation to the Ferrous Division meeting. At the same time, Schenker had a number of serious messages for his audience. For instance, he underlined the need for the recycling industry to take full account of technological changes and predicted a significant increase in automation within scrap operations, potentially including driverless trucks and scrap-carrying drones. “We are beyond the point where you can be ignorant of technology,” he remarked.