Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The European scrap and recycling market was not spared the challenges arising from the COVID-19 pandemic. Demand for scrap plummeted between March and May as countries around the world shut down their manufacturing facilities and major economies went into nationwide lockdowns. However, since May, when most automotive and manufacturing plants resumed operations, demand for scrap has also ticked up.


Speaking with Davis Index on why he thinks demand for both ferrous and non-ferrous scrap will grow over the coming months, Nico Rosseel, chief commercial officer of Galloo Recycling said, “Collections were returning to pre-pandemic levels by the end of June according to our company’s data.” He added that he was confident about demand for scrap rising over the next few months in Europe as companies resume and ramp-up their operations.


But along with these opportunities, the pandemic has also created challenges. For example, Rosseel explained, “The Chinese market remains very uncertain and we are unable to gauge if we will be able to continue exporting mixed non-ferrous material to this market.”


He added, “Many customers in India are also backing out of their commitments making it an unpredictable market for business, even though some honest Indian companies are trying to work with European suppliers. In fact, the South Asian market is riddled with incidents of buyers backing out at the last minute making it a large but dangerous market for business for European exporters.”


As a result, suppliers like Galloo have preferred to sort their mixed non-ferrous material in their own scrap yards instead of outsourcing it to Asia, as was done historically. “The in-house sorting is a challenging investment, but if we get the tonnage per hour right, then we have made a big step forward,” Rosseel pointed out.


These challenges have also prompted European suppliers to focus on bulk deals where demand has been robust from countries like Turkey and Egypt, especially for ferrous scrap. “We have witnessed increasing demand from Turkey for bulk vessels over the last couple of months,” Rosseel told Davis Index, “Demand for these is also growing in Egypt, though to a lesser extent.”


While Indian and Pakistani buyers are also looking for bulk and containerized ferrous scrap, he said that the high freight rates to these destinations make it almost impossible to do business with these countries. 


For non-ferrous scrap, the growth in containers has been more muted. “Aluminum scrap prices plummeted earlier this year, though they are recovering now,” he said. Moreover, “fluctuations in the Euro/USD exchange rate are not helping either, while increased freight rates remain an ongoing challenge for the containers business for the aluminum market.” 


“However, by the end of the year we will see some improving demand. Nickel and copper prices are already showing some improvements on the LME and that give us some hope for more demand for our materials,” Rosseel said.


Finally, Rosseel remains confident that the challenges faced by the industry in H1 2020 are behind them. “The recovery has already improved demand and supply to pre-pandemic levels and we expect the scrap market will continue to grow through the rest of this year,” he said. 

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