As I write this report on March 18, designated as Global Recycling Day, I would like to pay tribute to those veterans of the scrap recycling industry who preceded us; no celebration of our industry and of its activities would be complete without recognizing the passion and dedication of those legendary recyclers of the past. We all know of one, or perhaps several, who taught us how to grade, how to load a container, how to export or import. I would also like to celebrate the current generation of recyclers that is striving to move our industry forward.
In line with 2020 and early 2021, the last month has been full of hard-to-predict surprises. In Mexico, one major issue has been the severe energy shortage brought about by the extreme weather in Texas; Mexico depends on the USA for around 70% of its natural gas requirements and several Mexican energy plants depend on natural gas as fuel. So when the freeze struck Texas and knocked out its energy industry, all of Mexico’s metal consumers were affected too, with stoppages ranging from a couple of days to a full week. The damage does not stop there as most companies are seeing - or are yet to see - exorbitant power bills that will affect both their cash flow and profitability.
Continuously rising metal prices are also imposing higher cash-flow demands on the entire scrap supply chain, from peddlers to metal consumers, at a time when trade financing seems to be constrained.
Another issue currently affecting the scrap trade is the shortage of seavan containers, spaces on vessels and volatile freight rates. This is affecting the whole supply chain, creating some chaos for everyone. A number of metal fabricators have not been receiving timely deliveries from overseas, forcing them to scramble for local sources of value-added product such as aluminium billet or ingot. The majority of smelters are already operating at capacity and cannot satisfy these needs most of the time. The reliance on local value-added product also means less scrap is generated locally, altering the traditional balance of some scrap metal supply chains.
Glorem SC (MEX), General Delegate of the BIR Non-Ferrous Metals Division