The scrap metals industry is coming back to life, but the Bureau of International Recycling (BIR) contends it’s happening too slowly and that both demand and activity levels are too low.
The association warned that shutdowns like those that occurred en masse when the pandemic began could affect as much as 40pc of production. Although contingent on a host of factors, BIR asserted that the scrap industry could lose $200bn in earnings because of lost sales and subdued aerospace and automotive industries.
Weak ingot demand in the two aforementioned industries has affected secondary aluminum availability, as well as nickel, molybdenum, and high temperature alloy demand also. Chrome steel and ferro-titanium are also in the doldrums, as consumer confidence is anemic.
The Middle East’s economy greatly suffered because of the pandemic. Major oil-producing countries were forced to use their reserves as oil prices plummeted. Businesses in India will not return to full operation any time soon, with factories at about 50pc of their normal capacities, and some operating at 20-30pc, according to BIR’s estimates.
Smelters’ just-in-time delivery, as well as the scrap industry’s stocking furnacy-ready raw material for customers, has left many market participants with precarious cash flow. Some insurance companies are predicting bankruptcies within the metals industry.
Volumes in the UK have fallen by 50pc in spite of price improvements. However, many companies still have furloughed staff, and upon the UK government’s funding support running out in October, layoffs are expected.
However, the ferrous scrap sector is being buoyed by Turkish sales, while non-ferrous metals, like copper, are in high demand and have sent prices surging. Secondary aluminum, though, is struggling, the association noted.