By Paul Ploumis (ScrapMonster Author)
April 19, 2016 03:00:17 AM
SEATTLE (Scrap Monster): The analysts at the recently held Institute of Scrap Recycling Industries (ISRI) 2016 Convention & Exhibition in Las Vegas noted that current tough scrap market conditions may ease over the next few years. The gradual recovery of global economy will lift the market conditions, it noted. The ISRI also urged scrap recyclers to remain involved with them, even at times when market conditions pose difficult times.
According to Adam Schor, senior vice president and director of global equity strategies of Denver-based Janus Capital Group, China will continue to play key role in global metals markets for several years to come. He cited the commodity boom during the last decade as a ‘once in a lifetime’ event and noted that the markets are still in its hangover. The country accounted for more than 50% of the global demand during the boom period. China is now in destocking mode, Schor noted. It may take 2-3 years for the scrap market to regain supply-demand balance, Schor added.
Tony Crescenzi, vice president of Newport Beach-based PIMCO stated that the scrap market recovery process is already underway with the G-20 meet held in Shanghai during February this year. According to him, the devaluation of US dollar will make scrap from the country more attractive to outside buyers. The interest rates in the US are likely to stay low and reach 2% by end-2020, Crescenzi noted. The European Central Bank (ECB) interest rates may touch zero by then, he added.
Schor and Crescenzi noted that well-run companies are likely to survive the current difficult market conditions. The gradually improving global economy offers immense improvement opportunities for commodity markets in the years to come. However, exceptional margins witnessed during commodities super cycle is unlikely to return.
Meantime, Timothy Kneen, chief investment officer at Denver-based IFAM Capital stated that the current market presents an historic opportunity for recyclers to acquire assets at discounted value and to transfer assets to the next generation with less taxation.
