n° 169 – December 2020

Copper has hit its highest point in around seven years to restore a bullish feeling to the non-ferrous market. Scrap availability is good but all eyes are on China and on how its new import rules will be effected. On the other side of the coin, a rise in insolvencies represents a clear risk to the 2021 outlook for Germany. 

Germany’s GDP grew by 8.2% from July to September when compared to the second quarter, according to figures released by the Federal Statistical Office. The markets in the third and fourth quarters saw a shortage of metals caused by big demand from China and Japan plus a full order book for Germany’s automotive industry.

Rising 226 ingot prices were pushing scrap values higher every week. High steel prices are supporting collection activities and, together with ferrous scrap, there has been a good supply of non-ferrous. However, the proportion of high-grade copper was not as great as one might have expected with such strong LME prices. Chinese purchases of scrap under its new import regulations are leading to healthy demand in the non-ferrous sector.

Not every dark cloud brings rain and hopefully the threat of rising insolvencies will not be realized. However, suspension of the obligation to file for insolvency in Germany as part of the economic stimulus programme might bring a rising number of bankruptcies as a result, as the wave of bankruptcies predicted by many experts has not yet materialized. The Federal Statistical Office is projecting around 17,250 corporate insolvencies for 2020 as a whole - which, rather surprisingly, would be the lowest level for nearly 30 years in what has been an exceptional year dominated by the pandemic. I guess we should be very careful with whom we deal in the coming months.