The global scrap market Presentation at the Joint Study Groups workshop on Metals Recycling St' Pete

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The global scrap marketPresentation at the
Joint Study Groups workshop on Metals
RecyclingSt. Petersburg, 10-12 September 2003

• Olle Östensson, UNCTAD
• www.unctad.org/infocomm
• www.natural-resources.org

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Questions

• What drives international trade flows for scrap
  and virgin metal?
• How has the role of developing countries in
  global metals trade changed?
• Is international trade in scrap economically
  efficient?

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The location of semifabricating capacity

• Shift in manufacturing from developed to
  developing countries, largely based on FDI
• Accordingly, rapidly growing demand for metal
  semifabricates in developing countries
• Large domestic market provides base for export
  growth

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Developing countries have become important
exporters of semifabricates
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Increasing shares in an expanding market
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The increase in semifabricates production is
reflected in metals consumption
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Trends in Metal Consumption
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Trends in Intensity of Use of Non-ferrous
Metals (percentage, 1975 100)
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What are the raw materials for developing
countries metals consumption?Primary
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and secondary
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Is the mix of raw materials optimal?

• Scrap may be a preferred raw material in
  developing countries because of lower size
  threshold
• Lower labour costs should give developing
  countries a competitive advantage in recycling
• Avalability of domestic scrap is low because of
  rapidly rising metals consumption

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Recycled materials are becoming more important as
a source of supply Share of recovered material in
global supply of primary and secondary commodities
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But this is not reflected in international trade
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Regional Patterns of International Trade
in Non-ferrous Metal Scrap
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Developing countries  should  import a higher
proportion of scrap
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Supply-demand gap of secondary material in
rapidly industrializing countries
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Why does this not happen?

• Situation differs from one metal to another
  aluminium and copper perform better than lead and
  zinc
• Regulations inhibit trade Basel Convention and
  domestic regulations
• Note Are scrap export bans based on the Basel
  Convention compatible with WTO rules?

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Results

• Scrap shortage in developing countries
• Scrap oversupply in developed countries
• Large price differentials

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But perceptions differ

•  It is easier to export cable scrap from
  Switzerland to Asia than to send it to Munich 
• (Rita Dapont, MD of Metall-Verwertung München
  Hans Gschwendtner, Metal Bulletin Monthly, August
  2003)
•  the domestic supply-demand gap has driven up
  Indian battery scrap prices to between two and
  three times the international level 
• (A. Raychaudari and U. Hoffmann, The case of used
  lead acid batteries in India)