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

The biggest challenged faced by recyclers globally was the collection and harvesting of scrap. During the pandemic, the whole recycling system collapsed in most countries from mid-March, but the situation is recovering in May.   


Michael Lion, Chairman of BIR International Trade Council and Everwell Resources highlighted the problems faced by recyclers including difficulties in getting access to banking and credit facilities, cash-flow worries and that the COVID-19 pandemic has induced unprecedented uncertainties into the global economy. 


President of BIR, Tom Bird said there are challenges but demand relatively has held up well. There have been issues in transporting material, but one of the big impacts, according to industry participants, is the supply chain of material coming through the system enabling recyclers to fulfil orders. Volumes have been adversely impacted more than anything else.     


Recyclers have adopted to the pandemic by using video chats as visiting yards and office is impossible due to travel bans, according to Mark Sellier of Global Markets. Counterparty risk management lessons learnt from the 2008 global financial crisis was adopted to mitigate customer risk during the pandemic.


The biggest issue that international recyclers faced during the pandemic was the strict and the sudden lockdown issued by India. The suspension of banking operations in the initial phase of the lockdown and closure of logistic companies like FedEx hurt trade severely, said George Adams of SA Recycling, US. Other countries did have similar lockdowns but import and export trades continued at ports. But in India, loading and unloading of ships was not allowed. India was the only country that actually shutdown completely, he added. 


Containerised trade

Containerised scrap trade never stopped in other parts of Asia like Taiwan despite all the pandemic issues, they still have container movement going on. Despite this disruption, Adams stated that because of the security of LCs on the bulk shipment, they were pretty confident on shipping in bulk than in containers. 


Pricing of containers freight rates have increased since March, but there is no shortage of containers, and there are many new surcharges such as cleaning. Container-based global trade could be in an imbalance in the next month or so as exporters from Asian countries are receiving smaller trade orders from countries like the US (reduced imports), said David Chiao of Uni-All Group, US. This could push up freight rates for recyclers in the near term.


CCIC inspection 

Scrap shipments to China could become easier after July when the new classification for scrap would come to effect. Scrap will be classified as recycled material and might not need CCIC inspection and certification for imports, said Chiao. There will remain technical issues, post-shipment inspection will mostly be done my camera via the internet, which might not cause much disruption.


Mark Sellier of Global Markets differed and said CCIC inspection are expected to continue and during the pandemic in some region of Europe recyclers found it difficult to get CCIC clearance due to travel restrictions in China until recently. He opined that there are conflicting reports from China whether or not CCIC inspection will continue in the future. 


The COVID-19 crisis is unlike the global financial crisis of 2008, said Greg Schnitzer of Schnitzer Steel and it is more of a situational crisis as people are not able to travel. But on the West Coast of US, ferrous scrap business hasn’t really been disrupted by the pandemic as inspectors and surveyors were available locally. Greg stated that all markets were available during the pandemic, except India, which proved to very difficult and it is beginning to ease up. We are starting to see demand pick up, a lot of positive things are happening there. 


Fragmentation of the market

Global trade cycle, in terms of raw material or semi-finished good being imported from Asia to be processed in countries like Europe and then exported back to Asian countries, might change. Post-COVID, it is more easier to buy material in Europe nowadays that has to do with risk, said Joost van Kleef at Oryx Stainless, Netherland, speaking on protectionist trade practices. He added that the strict lockdown in India is impacting the stainless-steel market as the country is a consuming market. 

Speaking of trade disruptions, Bird said post-pandemic nations would review decoupling of industrial activities from China. Japan and the US are keen to decouple and it would be an interesting period as many issues and regulations would affect our industry directly.      

On the other hand, Chiao emphasised that although mixed metal scrap might not be imported by China, the country is still a big player as it is consuming huge volumes of semi-finished and finished metals.

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