The good news is that the first quarter of 2021 is not expected to have seen a development similar to the massive slump in German economic activity in the second quarter of 2020. Into the new year, there has been a solid start for production-related sectors; furthermore, we can see and hear from the industry that there is a high level of new orders in manufacturing as well as strong demand for German goods for export markets.
Germany’s seasonally-adjusted unemployment rate stood at 4.6% in January. The total number of people in employment was down 1.6% to 42.18 million, which is equivalent to 726,000 fewer jobs compared to the month before restrictions were imposed.
The aluminium industry made a very strong start, with rising ingot prices and good order books for the German car industry. Only the chip shortage disrupted global car production, including for German brands. In January and February, the automotive industry was left scrambling for semiconductors owing to strong demand from the smartphone industry. This was the reason why ingot prices corrected for a short while before recovering to their old, stable levels. Germany’s Volkswagen group is planning to build six battery factories in Europe to support electric vehicle production, putting e-mobility at the core of its business. With a further push in this sector, aluminium demand can be expected to rise in the coming years.
On the copper front, the uncertainty surrounding Chinese ports’ quality control procedures is slowly disappearing. Discounts are still at a very high level for No.1 and No.2 scrap. Even though the LME is at a high level, scrap recycling companies are reporting lower material availability and the market remains tight.
The container situation is improving but shipping forwarders still are talking about bottlenecks in terms of port capacities. This will not change in the near future and so high freight rates can be expected to remain for a longer period.
European Metal Recycling Limited (GBR), Board Member of the BIR Non-Ferrous Metals Division