By Carolina Curiel (ScrapMonster Author)
December 04, 2015 07:46:35 PM
BERLIN (Scrap Monster): More than 70% of Germany's steel recyclers are anticipating a further decline in business next year. Market confidence has sunk so low that only 5% of companies are planning investments while one-third expects to cut jobs, according to the results of a survey conducted by German steel recyclers confederation BDSV among its 550 members.
'Pessimistic.' That is the outlook for the majority of Germany's scrap metal recyclers, says German steel recyclers confederation BDSV. A dramatic fall in scrap prices combined with a decline in demand for scrap both at home and abroad have had - and will continue to have - a severe impact on many companies, the confederation stresses.
BDSV's survey shows that most companies expect their business positions to become worse in 2016. 72% of the respondents forecast a decline in turnover next year whereas a year ago only 19% predicted 2015 would be a worse year for business. Furthermore, every third company (33%) is planning to cut jobs in the coming year, far more than in the 2014 survey (6%). Only 2% of the companies intend to hire employees in 2016.
The survey also shows that investments are being put largely on hold: only 5% of the recycling firms are proposing to invest in 2016, says BDSV, whereas a year ago it was still 27%. 'These figures are clear proof of the extremely difficult situation we are in,' underlined BDSV’s departing president Heiner Gröger during the organisation’s annual gathering, held recently in Magdeburg.
Less scrap hunger, lower prices
According to the confederation, demand for steel scrap in Germany alone has sunk by some 2.6 million tonnes over the past eight years to around 19 million tonnes. During the first six months of 2015, German steel mills cut their scrap consumption by almost 10%. In addition, the German steel scrap price slid from Euro 226 per tonne in January to Euro 137 just 10 months later.
Lower export volumes to China and Turkey have had a major impact. Scrap exports from the EU to Turkey - the world's largest steel scrap consumer for many years - contracted by 13% to 4.4 million tonnes in the first six months of 2015.
'Major steel producer Turkey has less hunger for scrap due to the wars in the Middle East,' explains BDSV's international markets expert Michael Mett of TSR Recycling. 'Steel now simply cannot be delivered to war-zone countries such as Syria.'
'We have been sleeping'
At the Magdeburg gathering, Gröger aimed a critical comment at his fellow recyclers across Germany and Europe as a whole. 'We have been waiting too long for the crisis to solve itself,' he suggested. 'Maybe we have been sleeping.' Gröger's successor Andreas Schwenter adopted a more positive tone in announcing: 'Someday, there will be growth again - but we will have to work hard for it.' And he added that he would do his 'utmost to give BDSV members the right tools for this'.