We have grown so accustomed to a volatile business environment over recent times that the greater surprise would be to report a year of relative calm. In the event, 2018 followed the pattern of many of its immediate predecessors in giving us choppy market conditions, characterised by generally declining prices and a simultaneous downward drift in trading volumes.

If we take aluminium as an example, the light metal started 2018 above US$ 2200 per tonne on the LME and climbed to just short of US$ 2600 by mid-April before leaking value throughout the rest of the year to end at its lowest point below US$ 1870. The trajectory for copper was similarly dramatic: the red metal’s LME price oscillated between US$ 6500 and US$ 7260 per tonne before nosediving from this high point to below US$ 6000 in a matter of six weeks during the middle of the year, ultimately dipping as low as US$ 5822 before closing out 2018 at around US$ 6000 once again.

To add a further element of disturbance to these turbulent market conditions, the non-ferrous scrap sector – like many others – was forced to grapple with the consequences of the US/China trade war, which has had a destabilising effect on all markets while at the same time undermining business confidence around the world.

Of a more direct impact, the Chinese government continued to drive home its policy of tightening scrap import controls. Indeed, one of its final acts of 2018 was to switch eight types of waste and scrap – including copper and aluminium – from its “non-restricted” to its “restricted” list for the purposes of importation. I would stress that BIR continues to work with China in support of the interests of its membership, liaising with the CMRA and with the Chinese authorities in a bid to achieve non-ferrous metal category definitions that allow trading paths to remain open wherever possible for our secondary raw materials.

With China seemingly determined to close its borders to most forms of mixed non-ferrous scrap, we must necessarily devote more attention to locating and supporting alternative destination countries.

India is often mentioned as a massive market with huge potential to use imported materials but, in 2018, its government limited such opportunities by tightening business lending. Meanwhile, several countries in South East Asia provided useful homes for some of our materials. However, we remain mindful of two factors: firstly, none of these nations will ever come close to matching China in terms of the volumes they are capable of consuming; and secondly, many of their governments are following the lead of China by introducing stricter import controls. As I wrote in our Non-Ferrous Metals World Mirror back in May last year: “How many more years will these new markets last before they follow in China’s footsteps if we don’t pay attention to our quality and environmental consciousness?”

These issues were considered in depth during our meeting in Barcelona last May, not only by our guest speakers Josep Berdejo of the La Farga metallurgical group in Spain and Ion Olaeta, President of Spanish recycling association FER, but also during an excellent panel debate in which it was noted that, for example, Thailand had already imposed import bans on certain forms of electronic/plastics scrap and that regulatory changes could be expected elsewhere too.

Another panel debate at our London meeting carried forward this discussion of the Chinese market and potential alternatives. The gathering also provided an opportunity to assess the market roller-coaster ride triggered by the US-China trade war; our eminent guest speaker, Edward Meir of Commodity Research Group, dismissed the use of tariffs by both sides as “a very blunt instrument” prone to delivering unintended consequences, such as “chilling” business investment and cancellation of projects.

BIR remains fundamentally opposed to tariffs and similar instruments that stand in the way of our long-cherished principle of free and fair trade. Unfortunately, however, they have become an increasingly strong presence in today’s international trading environment.

Indeed, our trade will face ever stronger headwinds in 2019 if the dispute between the USA and China either remains unresolved or, worse still, deepens. The latter weeks of 2018 and early weeks of 2019 have brought a more conciliatory tone to discussions between the two nations, so let us hope a solution can be found that serves all our interests.

by David Chiao
Uni-All Group Ltd (USA)
President Non-Ferrous Metals Division