More nonferrous scrap yards in Europe could shut

More nonferrous metal scrap yards in Europe have warned that operations could halt as the coronavirus pandemic strips away demand and the industry workforce becomes increasingly wary of infection.

"The orders are drying up, foundries are closing, steel mills are not taking scrap, the whole chain will slowly grind to a halt — it's like a super tanker, it does not grind to a halt overnight," a UK-based supplier said.

More European countries have imposed full lockdowns and ordered non-essential businesses over the past two weeks. Italy, with the most coronavirus cases in Europe, stepped up its lockdown on 22 March to include non-essential businesses for two weeks. The UK followed suit the next day and Spain this week.

The recycling industry has been classed as essential in several countries, including the UK and parts of Italy. As a result, many scrap yards are still able to operate, but are quieter as demand for nonferrous metal scrap plunges in response to lower manufacturing activity. This has also reduced the generation of scrap in the market.

Despite not being ordered to, many scrapyards have chosen to shut temporarily as demand dries up.

"More and more of our suppliers are closing their plants and more and more of our customer are doing the same. If it goes on like this, we will be forced to do the same, I'm afraid," a European scrap supplier said.

Some yards have shut voluntarily in the UK because their margins are no longer viable, market participants said.

Global recycling firms European Metal Recycling (EMR) and Sims Metal Management continue to operate in the UK, but have stopped collections of scrap from third parties as part of social distancing measures.

Without a government order to halt operations in England, many workers in scrap yards — some of whom are self-employed — will be unable to claim government grants.

"In an ideal world, we would be stopping all together, they have not been clear enough or strict enough for all manufacturing to stop. Unless [prime minister] Boris [Johnson] tells the recycling industry to halt, self-employed workers cannot get payment from the government," the UK-based scrap supplier said.

By Yoke Wong