Scarp metal industry in Europe is facing a decline as a consequence of low demand from the major industries which are suffering from economic crisis.
According to the Head of European federation of scrap dealers, business of scrap metals in Europe is likely to reduce in 2008 in view of the global economic slowdown. It is also stated that in an attempt to secure supplies, some consumers may buy the recycling firms, as reported by guardian.
Recording the lowest demand in 33 months, copper declined by as high as 8% in the third week of October 2008. Scrap serves as the raw material for about 40% of total copper metal produced worldwide. Its future trading is done on a discounted value on the London Metal Exchange (LME).
Moreover, due to falling demand, prices of steel on LME came to the lowest mark in the third week of October 2008. Aluminium was also affected slightly.
The business of scrap would certainly be affected as major parts of non-ferrous scrap metals are used in construction, power, automotive and transport sectors. Since all these sectors are strongly struck by the economic slowdown corresponding to the global financial crunch, the scrap demand would go down tremendously.
Further, Corus is reducing its production by 20% in the entire operations. This action is taken in response to declining demand from the major customers in the construction, automotive and engineering industries.
Moreover, Europe’s plan to cut down the “Greenhouse Gas” emissions is already in danger due to the financial turmoil. Regardless of strict carbon laws, the environmental committee offered some concessions by permitting a phase-in period to the energy-intensive industries.
According to a Senior Research Analyst at RNCOS, “The scarp industry is eagerly hoping for the market to recover soon. A recovery in demand and the consumers’ need to restock may be seen before the commencement of next decade. Further, low metal price relative to manufacturing cost and expensive capital may lead to a supply retreat in near future.”
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