Scrap metal industry overburdened by strict regulations and tough market conditions

By Paul Ploumis (ScrapMonster Author)

May 27, 2016 05:01:54 AM

SPOKANE (Scrap Monster): The Non-Ferrous World Mirror-May 2016 released by the Bureau of International Recycling (BIR) notes that stricter regulations on scrap exports and tougher market conditions across the world have overburdened the formal scrap metal industry during the month of April this year. The monthly report focuses on the new regulations on scrap exports recently enforced by Mexican authorities.

Mexico

The Mexican customs authorities have reportedly intensified inspections on scrap export cargoes, thereby leading to delays in shipments. The export activity has been impeded by a new rule which mandates scrap exporters in the country to enroll with an export registry. The customs inspection procedures are part of an attempt to prevent exports of semi or finished goods in the name of scrap.

According to sources, the latest move by the Mexican authorities may aid in curbing illegal shipments, the impacts of which are to be seen in the near future. However, the exporters view them as ‘overburden’ as there are already dozens of rules to regulate scrap metal trade in the country. The new rule would lead to additional costs, thereby impacting the profitability of the business. Incidentally, the scrap metal export sector is already under reeling under margin pressure and low scrap availability.

Asia and Middle East

The prevailing extremely difficult market conditions coupled with regulatory hurdles have led to closure of a few small to medium-sized scrap operations in Russia. The country has included all kinds of scrap on the list of raw materials vital to domestic industry, which gives the right for the government to implement outright and immediate ban on scrap exports anytime. Meantime, Russian authorities have called for restrictions on scrap exports from union countries such as Kazakhstan and Belarus.

The latest figures released by Chinese Customs authorities indicate that copper scrap imports surged higher significantly during the month of March this year. According to data, China’s copper scrap imports during March this year totaled 300 kt, jumping higher by nearly 76% over the previous month. The country’s copper scrap imports had totaled around 170 kt during February this year. The unexpected jump in imports is mainly on account of high stimulus spending by the Chinese authorities.

The demand for scrap imports have weakened in South East Asian countries despite shortage of scrap in domestic market. The unprecedented rise in exports of UBC scrap to South Korea has worsened the domestic availability of that material. Meantime, purchases of other grades of aluminum scrap by Japanese mills remained buoyant.

The scrap exports from the Middle East region has dropped significantly on account of lower demand from India- the key buyer of the region’s scrap.

Africa

The steel and stainless steel scrap trade remained volatile in South Africa. The business conditions worsened with demand for scrap witnessing sharp plunge.

Other regions

The scrap market conditions in Australasia continued to remain challenging. The US reported sharp rise in collection volumes of ferrous and nonferrous scrap. The country reported surge in Zorba prices. Germany too witnessed short surge in available volumes of nonferrous scrap. The UK scrap market registered marginal improvement in April this year. The strong demand in market was offset by low scrap volumes.