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COVID-19 Update by BIR Commodity Presidents/Chairmen: Some signs of improvement but uncertainty still reigns

  • 03 September 2020
  • BIR | Covid

It is now more than six months since COVID-19 began to dominate headlines around the world. Responses to the pandemic have been modified over time and have varied from country to country. For this reason, BIR has looked to provide regular updates on the impact of the virus on recycling markets globally, with the latest expert feedback coming from the world organization’s Divisional Presidents and Committee Chairmen.

Industry operations have returned to normal in China but all eyes are now on how import and export procedures might be affected under the new “recycled materials” qualification system for copper, brass and cast aluminium alloys. Full details have yet to be officially announced by the Chinese government but several major shipping lines have already confirmed that they will no longer accept bookings for “scrap”. As stated previously, companies exporting metal scrap to China must comply with all the current procedures until the rules are changed, including being registered with AQSIQ and submitting to pre-shipment inspections.

In Mexico, where COVID-19 cases remain on the increase, industries are being allowed to continue to operate and private enterprises are adopting as many safety measures as each can devise and afford. Non-ferrous metal scrap generation is gradually improving - but not quite at the pace of demand. During the early months of the pandemic, most of Mexico’s consumers had been proactive in halting new purchases and working down their inventories, but now they are finding scrap availability to be quite tight as they attempt to ramp up production.

For many countries, the ferrous scrap industry is now seeing very little impact from COVID-19, although issues continue to surround the market in India which has just set a record for the world’s highest single-day increase in Coronavirus cases. Feedback from the e-scrap sector also suggests that business for most operators has returned almost to normal.

However, economic recovery in general will continue to be significantly influenced by the pandemic and, even in those countries to have passed the peak of infections, by concerns over a “second wave”. In Europe’s biggest economy Germany, for example, there has been an increase in reported cases since mid-July, partly as a result of more travel during the holiday period and also lower levels of discipline. At present, however, the situation appears to be largely under control.

Many market indicators are showing a stable increase in activity levels among leading industries, such as the construction and white goods sectors which are so important to, for example, stainless steel producers and therefore to their raw material suppliers. But with governments currently taking all possible measures to avoid the aforementioned “second wave”, this will limit further growth expectations.

Among the non-metal commodities covered by BIR, markets for used textiles have been slowly improving. The volumes currently being collected can be placed but prices are still around a third below pre-COVID levels. There is still plenty of uncertainty in the market and demand is not sufficient to reduce inventories built up during the periods of lockdown; indeed, stock levels are estimated to be around three times higher than normal for this time of year. The outlook for the coming months remains highly uncertain and will depend largely on COVID-19 developments and the reactions of individual governments. Downside risks for the markets continue to be very high, with no upside potential envisaged for the next few months.

Uncertainty also dominates the global plastics sector, although feedback from Europe suggests an improving market and rising demand for recycled materials. Prices remain at a low level despite increases in the value of oil and of prime material. The last few months have also brought a slight improvement in the Far East but conditions are becoming more challenging for the scrap plastic industry because pricing is not matching customers’ target prices.

Another challenge is that shipping lines are not accepting scrap plastics for Hong Kong owing to the ban on solid waste imports. They are also wary of possible changes to plastic scrap import rules in Hong Kong for compliance with the Basel Convention as from January 1 next year.

For anyone returning to Hong Kong from Europe, testing and quarantine measures are very strict and are acting as a severe disincentive to travel.

Regarding used tyres and rubber, there is growing demand in China but the European market is less active, with prices still at lower levels despite the aforementioned increase for oil and for virgin resin counterparts. There are still challenges attached to securing enough end-of-life tyres in Europe to meet the growing Asian demand for crumb rubber and no improvement is foreseen during the remainder of the year owing to the dramatic impact on collection volumes in most countries of much fewer cars and trucks on the road.

Across many parts of Europe, paper and board collection levels have been low of late owing to summer holidays; with demand high from the mills, this has created reasonably good business conditions. High levels of demand have been seen from Indonesia, India, Thailand, Vietnam and China. European mills, conversely, have seen lower orders owing to the holidays; in addition, they continued to produce during lockdown and so have had to sell their stocks.

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