BIR Non-Ferrous Mirror August 2015

Global – The following article is based on the latest Non-Ferrous Metals World Mirror produced by the BIR world recycling organisation for the benefit of its members.

In India, confusion remains ‘palpable’ among most importers, exporters and even inspection agencies regarding new pre-shipment inspection (PSI) rules for scrap imports. The requirement on inspectors to conduct the checks and upload pictures in a specific pattern to the Directorate General of Foreign Trade (DGFT) website is forcing more time to be spent at each loading site – ‘which ultimately means that PSI agencies would need to recruit additional inspectors, arrange their work visas, station them strategically to cover wider areas, and impart training’. Additional testing equipment will also be required, it is suggested.

On the upside, the new agency set-up will ‘allow India to buy scrap from virtually any part of the world’ and permit clearance without a PSI certificate in certain circumstances – that is, at specified Indian ports where radiological detection equipment has been installed so long as material is in shredded, sheared, bundled, baled, briquetted, turnings, borings or granulated form. Under this provision, however, the importer must provide a bank guarantee for 1 million rupees and must accept all responsibilities – financial and otherwise – for re-exporting the material to the point of origin if contamination were to be found.

Although the trade is feeling ‘jittery’, there are hopes that fine-tuning of this new system will give Indian importers the confidence to renew their normal business activity levels over the coming weeks. The situation in India is one of a number of recent challenges identified by the scrap sector in the Middle East, others being the short working hours during Ramadan, falling prices on the LME and heavy congestion at major ports in the region.

In the southern hemisphere, market conditions are also described as ‘challenging’ in both Australia and New Zealand, with merchants reporting lower tonnages and a reluctance among many to supply at current low price levels.

Meanwhile, there is sufficient raw material in South Africa but scrap prices being paid in the marketplace are high. From the USA, it is reported that secondary aluminium prices continue to be ‘flat’ as prime material remains cheap and ‘remelting of spec metal seems to be the choice rather than having to make scrap blends’.

There has been ‘robust’ demand for secondary grades of aluminium scrap in Mexico but yards and consumers remain concerned about the scarcity of domestic scrap volumes. As for light metal developments in Japan, secondary smelters have seen steady demand for aluminium alloy, partly because of the depreciation of the yen against the US dollar.

However, those Chinese secondary smelters heavily reliant on exports to Japan ‘are struggling with poor sales and low prices’. In China itself, the price differential between the LME and the Shanghai Futures Exchange ‘is becoming attractive for copper importers’.

Meanwhile, the China Mining Association has projected that annual domestic consumption of refined copper and aluminium is expected to peak within the period 2022-25 at, respectively, 13-15 million tonnes and 27-29 million tonnes – and then to remain ‘at high levels’.

Over into Europe, scrap availability is good, demand is limited and prices are low in Germany, with the result that ‘it has become increasingly difficult to make a reasonable profit’. Similar sentiments are expressed in the UK, with ‘a low volume of supply matched by the low volume of demand’.

Aluminium alloy sales from the UK into mainland Europe have been weakened by a combination of summer holiday shuts and the strength of sterling in relation to the Euro. In Italy, one of the main factors for business has been short payment terms because of constrained access to credit as well as the high associated costs.

From the Nordic Countries, meanwhile, it is reported that government changes in Denmark are unlikely to deflect the focus from low interest rates and a steady exchange rate between the Danish krone and the Euro.

The markets in Russia are awaiting a further duty reduction in line with the World Trade Organization agreement concluded four years ago. But now that the government has placed scrap metals on a list of raw materials that are strategically vital to the Russian economy, scrap exports ‘could be easily restricted’ if deemed necessary.