The economic downturn in domestic and foreign markets has served to reduce scrap prices.
Brazil’s ferrous scrap market has remained quiet in recent months, with falling prices also caused by a reduction in finished product exports, high stocks at steel mills and a downturn in the Asian market.
Scrap companies are also worried by the current debate taking place in Congress about a reform that could create a new single tax, replacing the multiple existing taxes on cities, states and unions. According to Clineu Alvarenga, President of the National Institute of Iron and Steel Scrap Companies (INESFA) whose membership comprises small, medium and large businesses within the ferrous and non-ferrous scrap sector, this imminent tax unification could be harmful not only to those associated with INESFA but also other companies across the recycling chain. It is argued that this could affect 5000 companies and 1.5 million direct and indirect jobs in the harvesting, separation, preparation, transportation and trading of metallic scrap.
Banking institutions have been restricting credit for the financing of buy and sell operations in the recycled segment around the world, resulting in serious delays in commercial settlements and damage to recycling companies’ cash-flow. We should also be mindful of fraudsters taking advantage of opportunities for cheating; market claims will continue to rise, and many order/contract cancellations will occur.
Unfortunately, we do not know how long the market will remain in the current downturn, and the question today is who will survive it and who will not.
INESFA, the Brazilian Association of Iron and Steel Companies (BRA), Board Member of the BIR Latin America Committee