Executive Summary

World markets for primary ferrous and non-ferrous metals are very volatile, and the metal recycling industry closely follows these movements, both in prices and the strength or weakness of demand. Global requirements for metal fell between 1995 and 1999 for two reasons — the financial crises in South East Asian industrialised countries suffered between 1997 and 1999, and the slow growth of leading European economies. World economic developments inevitably had an impact on total UK demand for the principal recycled ferrous and non-ferrous metals. The level of demand fell by 11.3% in value terms, from £1.48bn in 1995 to £1.31bn in 1999.

The principal scrap metals collected and recycled are iron and steel (ferrous metals), aluminium, copper, lead, zinc, tin and nickel (non-ferrous metals). Other recycled scrap metals are small in quantity but high in value, and include gold, silver, platinum, palladium, manganese, titanium, tungsten, molybdenum, vanadium, cadmium and antimony.

In addition to domestic demand, there is a very active international trade in recycled metals, as these provide a cheaper alternative to primary metals, which are expensive to mine, process and refine for conversion into finished products. Both UK and international markets are very competitive, as export and import flows are usually determined by the price of quality-graded baled scrap, which is readily available to buyers.

Structural changes in the nature of UK manufacturing industry are gradually reducing domestic demand for certain types of metals — emphasis is increasingly being put on electronic and light rather than heavy engineering. The modernisation of industry is also increasing the level of domestic scrap available to metal merchants, therefore there is a strong incentive to find more export markets to offset possible weaker home demand.

Faster growth in the world economy is expected over the period 2000 to 2004: Asian economies are recovering from the setbacks of the late 1990s; Central and Eastern Europe will make a larger contribution to total consumption; Western European businesses are increasingly active in exploiting new opportunities; the US is increasing its consumption of industrial and consumer goods; and South America enters mainstream markets with manufactured goods as well as primary commodities.

Demand prospects for recycled metals over the 5-year period 2000 to 2004 are expected to be buoyant in the UK, particularly for aluminium. The total value of sales is estimated to grow by 19.4%, from £1.36bn in 2000 to £1.63bn in 2004.

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