BIR Non-Ferrous session: Expanding recycling facilities in the US fuel optimism for non-ferrous

During the BIR convention held on 24 October, 2023, in Abu Dhabi, the Non-Ferrous Division's delegates were presented with an optimistic assessment of the medium to long-term future of the non-ferrous metal recycling industry in the United States. This positive outlook was conveyed despite a year marked by adverse trends in producer price indices for recycled non-ferrous metals.

Joe Pickard, the Chief Economist and Director of Commodities at ISRI (Institute of Scrap Recycling Industries), the leading organization for recyclers in the US, shared his insights on the current challenges and future opportunities within the non-ferrous sector.

Mr. Pickard stated, "When I talk to our ISRI members, there's not a single one who says 2023 has been a better year than 2022, or 2021 for that matter. Going forward we have some tremendous opportunities to grow our businesses. Even though we are experiencing some short-term challenges the medium-to-longer-term prospect is incredibly bright for our industry."

The US economy has displayed resilience, but there has been a noticeable divergence in performance among various sectors, with the service sector consistently outperforming manufacturing for nearly a year. However, throughout this period, the spreads for US recycled copper and aluminium have remained relatively steady, indicating a balance between supply and demand.

He also expressed his concern about the potential deepening of the property sector crisis in China, which could have global repercussions for commodity exporters. The tight labour market in the US, characterized by more job openings than unemployed individuals, presents a significant challenge for US recyclers in their efforts to attract and retain skilled personnel.

Furthermore, the ongoing labour disputes in the automotive sector carry substantial implications for the demand for non-ferrous metals in the United States.

China's initiatives to curtail the import of low-quality scrap have prompted the United States to increase exports of higher-quality non-ferrous metals, including Bare Bright and Copper 1 & 2. India has emerged as the second-largest market for all categories of recycled commodities, offering significant potential for expanded trade.

He also conveyed his optimism regarding the growing number of new facilities in the United States dedicated to processing secondary metals, with a particular emphasis on copper and aluminium. Notably, major projects announced by Aluminum Dynamics and Novelis are anticipated to have a favorable impact on market dynamics in the future.

Deepesh Goyal, the Chief Commercial Officer of Fujairah Gold in the UAE, offered insights into the copper market in the Middle East. Fujairah Gold, a subsidiary of the Indian mining conglomerate Vedanta Resources Ltd, discussed how the focus on ESG (Environmental, Social, and Governance) goals and other commitments has encouraged primary metal producers to explore opportunities in secondary metal processing.

The demand for copper, primarily fueled by the electric vehicle and renewable energy sectors, offers substantial prospects for recyclers. Projections indicate that global copper demand will see an annual increase of 1 million metric tonne until 2030. The Middle East is poised for exceptional growth during this period, expecting nearly a 50% expansion, surpassing the global average.

Mr. Goyal identified various challenges confronting recyclers, including regulatory hurdles, trade restrictions, maintaining consistent quality, transparency in trade agreements, and narrow profit margins. He emphasized that Gulf countries export approximately 200,000 tonnes of copper annually, creating opportunities for local scrap refining.

In terms of potential acquisitions within the recycling sector, Mr. Goyal expressed his company's willingness to invest and explore technological solutions. Furthermore, there is a growing trend of incorporating secondary metals into their products, with plans to increase their usage from the current 15% to 20%. They have an internal goal of reaching 30%, contingent on maintaining quality and consistency. Additionally, the company is investing in the integration of other secondary metals, such as zinc and lead.