The metals recycling markets have been performing well in the first quarter of 2017, but there are uncertainties in many quarters related to various issues such as international trade, environmental controls and so on. Swaliha Shanavas speaks to industry experts to find out more on the subject.  The world has changed so much since several countries opened up decades ago including China, which turned out to be one of the biggest markets for countries around the world.

The economic liberalisation in India in the 90s led to the nation’s rapid economic growth and other regions in the world have been moving forward, with a great deal of the transformation being brought about by engaging in international trade. With nations worldwide opening up their economies and with companies seeking new markets to grow their business, trade with the international community has become the order of the day. Yet, there have been issues related to trade across borders including protectionism and the recycling industry has been raising its voice for fair trade for many years now. With the recent elections in the US, all eyes are now on the new administration of Donald Trump as he seems to be taking a very different approach that is pointing to a protectionist stance.

“Many of his economic and trade policies are based on the “US First” doctrine instead of the globalisation mantra of his predecessors. He has withdrawn the USA from the Transatlantic Trade and Investment Partnership (TTIP) as well as from the Trans Pacific Partnership (TPP), replacing these with bilateral agreements. As a leading trade organisation, BIR was hoping not to see trade barriers potentially leading to acts of trade retaliation,” wrote David Chiao, President of the Nonferrous Metals Division, in BIR World Mirror March 2017. So what does the new administration’s economic and trade policies towards different countries spell for international trade, and would it in any manner impact the recycling sector in particular? “It is still too early to determine what impacts, if any, the new administration’s policies will have on the global trade of recycled commodities.

However, regardless the direction that the new administration takes, ISRI remains firmly committed to free and fair trade. We are working closely with recycling trade associations around the world to monitor the rising tide of protectionist tendencies and to emphasise the importance of global trade,” says Robin Wiener, President, Institute of Scrap Recycling Industries (ISRI). Anshul Gupta, CEO of PGI Group says the new approach of US administration is “very strong” in terms of protectionism. “We foresee new lifeline being thrown to various manufacturers based in USA and in a few years increased utilisation of installed capacities and expansion is evident.” Strong demand for raw materials of steel, aluminium, lead, stainless steel, etc., has been witnessed in the past few months, and “this approach would open a Pandora’s box of negotiation of multiple trade treaties,” says Gupta.

“Some of world’s largest exporting economies have already started brainstorming their options and approach to negotiate best deals for their country. Ultimately ‘protectionism’ seems to be flavour of the next decade,” he underscores. “Today we are living in a very chaotic world, full of uncertainties. I think you would all agree that we’ve negotiated a very difficult 2016. But going forward, I think we still are going to be facing a mixed bag of challenges. Global economies are slowing down...

The world today seems to be driven by popular rhetoric supporting anti-globalisation moves, protectionism and increased nationalist feelings,” said BIR President Ranjit Baxi during his speech at the BMR conference in Dubai this March. Among other challenges facing the recycling industry, Baxi said there are more regulatory controls being imposed at very short notice. “All of us need to fight together against protectionism so that we can promote fair and free trade of recyclables the world over. Circular economy is becoming a strong subject to promote sustainable growth.

But I personally believe that it should not be a regional philosophy, it should be a global philosophy. Circular economy must be looking at trade across the world, not just in one region.” He said BIR was working together with the industry “to promote globalisation, fair and free trade of recyclables. BIR will make sure that our industry will grow to be a recognised force globally and what we are all doing together gets even more recognition.”

At present, the industry is facing uncertain times in terms of markets, governmental policies and international relations, as is the case with other industries across the economy and this uncertainty “is probably the largest deterrent to growth for the scrap recycling industry today,” says Wiener. “Uncertainty results from numerous activities, including what occurs in the political arena within our domestic markets as well as between markets (with respect to trade policy, taxes, regulations, etc.), the commodity markets themselves, and, of course, the health of the global economy.

These uncertainties can and do weigh on recycling industry investment, hiring and growth.” Some of the major challenges for the metal recycling sector in Gupta’s view are the slowdown in demand from the “biggest consumer of base metals - China”; all Asian producers are trying to optimise increased production capacities; continuing negative outlook of banks for the metal sector; further tightening of import norms of various countries like China and India; and many major market players in Asia have closed down, which has reduced market demand for raw material.

Environment in focus

In another part of the globe, China has launched another environmental campaign under the name “National Sword” or “Border-Gate Sword” a year-long crackdown on illegal import of “foreign waste” and other environmental violations. The nation is introducing stricter regulations to ensure that only renewables are enter China and urge the local recyclers to improve their operations by adopting new technologies and so on. Does this move impact international markets and the overall business climate?

“Inconsistency and lack of transparency are probably the biggest challenges associated with changing environmental and import regulations. Provided that reasonable notice is provided and regulations are consistently applied, scrap recyclers are extremely responsive to changing market dynamics and government requirements,” states Wiener. As long as new or newly-enforced rules promote responsible recycling, they are ultimately beneficial to scrap recyclers, consumers and the environment, she adds. “I have observed China for the last 15 years and the environmental growth and awareness in the country has been phenomenal over this period,” said Baxi during BMR conference. “Quality, time and again is becoming a central focus for us.

Inspection regimes are getting stronger. India, Indonesia and China are all promoting more controls. There is increasing controls at ports of shipments,” he remarked, pointing out to the ‘Border-Gate Sword’ implemented in 2017. “Business is like flowing water. If you close one path, it would take its own course and find another way. You cannot stop it. But we need to keep in mind that we are in the business of ‘protecting our planet’, so we all understand that these regulations are for our own good and have to be observed,” Gupta underlines. Due to stricter environmental regulations from China and India most of recyclers have started updating and upgrading themselves and have improved a lot, he comments. “It has definitely brought some slow down, but now it seems to back on track.” In fact, he says, during this transition period recyclers got access to various other markets too. So trade has further expanded and evolved.