Sims extends nonferrous metal scrap cutback globally
International metal recycling firm Sims Metal Management will extend its cutback on non-ferrous metal scrap buying across its global operations as demand plunges amid the coronavirus pandemic.
As a precaution to reduce the spread of coronavirus in workplaces, Sims last week temporarily stopped collections of ferrous and nonferrous scrap from third parties in their UK yards and shut some of their US facilities to the public.
Market sources told Argus this week that Sims has essentially halted all active procurement of any non-ferrous scrap in the UK and will be further cutting back purchases across all its global operations throughout April, with the extent of the decrease dependent on the coronavirus restriction policies in effect across its geographies.
The company's global cutback is also in response to a steep drop-off in demand for non-ferrous scrap across all its major markets.
"You can't keep buying if you can't send it out. It is not a decision Sims took lightly. It was backed into a corner as so many countries are on lockdown," a European scrap dealer said.
The Sims group operates more than 250 sites in five continents and has an extensive presence across Australasia in addition to its US and UK operation. Ferrous and non-ferrous scrap volumes processed across the group totalled 4.4mn t in the fiscal first half of 2020. Nonferrous brokerage sales volumes dropped by nearly 5pc on the year to 731,000t over the same period.
Sims will continue to fulfil existing nonferrous scrap contracts by processing stock from the group's inventory, but customers have also cancelled contracts and delayed shipments as their plants were ordered to shut down because of containment measures.
The company will continue to receive scrap from its industrial accounts, but this represents a relatively low portion of its non-ferrous scrap sourcing compared with ferrous, where industrial flows account for high volumes.
And non-ferrous scrap intake from Sims' global industrial accounts, which are mainly factories and original equipment manufacturers, has reduced significantly as many plants have shut because of the pandemic-related demand downturn. Consequently, in the UK, Sims has also started halting procurement of non-ferrous scrap from industrial accounts.
"It's a domino effect, it goes right down the line. Sims is probably safe to temporarily close [these industrial accounts] without upsetting anyone," a European scrap dealer said.
A Sims spokesperson said its UK operations "remain committed to providing services necessary for the business continuity of critical manufacturing sectors.
"In instances where a manufacturing supplier needs to produce essential equipment for hospitals or prevent the spread of coronavirus, special arrangements will be made to continue servicing these suppliers. This is a temporary measure, and we will continuously monitor the situation for changing requirements and guidance in the UK and abroad so we may adapt accordingly," the spokesperson added.
Sims' strategy for its global operations is a more significant cutback than other major international scrap suppliers such as EMR, TSR and Scholz, who are all still actively sourcing non-ferrous scrap from other merchants, albeit at lower volume.
"I do not understand the strategy behind this, I will never close our yards until it is full," said one scrap supplier in Europe.
"Even if you don't move material, you still have the same fixed costs," a second scrap supplier said.
But other recycling firms said large recyclers' purchases of non-ferrous scrap procurement even from other yards is likely to become more difficult as smaller scrap yards close because of the absence of demand, while industry workforces are also increasingly reluctant to work because of the risks of infection.
"More and more of our suppliers are closing their plants and more of our customers are doing the same. If it goes on like this, we will be forced to close too, I'm afraid," a third European scrap supplier said.
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