The German economy is currently in a cooling-off phase and the recycling industry is feeling the effects as metal producers’ earlier capacity shortages have declined significantly. Some parts of the automotive industry even cut production owing to weaker demand.
Aluminium producers in Europe are reporting lower-than-expected demand and so official ingot prices did not increase in the second quarter. The correlation between 226 ingot prices and scrap prices is not the same as it was a year ago. Here, the main focus is on quality.
On the cash flow side, the recycling industry in Germany and across the whole of Europe is under even more financial pressure than it was two years ago. Smelters’ new policies of just-in-time deliveries are forcing scrap companies to stock scrap, and payments have been delayed in some areas too. Small and medium-sized family businesses prefer to deal with companies that are punctual in their payments.
All eyes are on China when it comes to brass and copper scrap. China has imported more copper ore and blister copper this year to compensate for the shortage of copper units which had entered China in previous years in the form of cable, motors and other types of scrap. Cathode premiums have not changed significantly.
Owing to Easter, April was a quiet month as many companies bridged the holidays. The month of May might well be the last before the summer holidays in which we see higher levels of activity in our markets.
European Metal Recycling Limited (GBR), Board Member of the BIR Non-Ferrous Metals Division