The metals business. How much money is made from scrap iron

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Lately, there has been a lot of talk about the metals market in Moldova. Given the increased interest in this market and the lack of analysis in Moldova, we decided to republish an old article from economica.net, which shows the share of this business in the neighbouring country. It is true that the article, being from 2012, also reflects the growth that was attested after the 2008-2009 crisis. Now it is not known how the market will react to the global crisis caused by COVID-19. But regardless of these nuances, the material still seems relevant. Especially as information is «slipped» or «leaked» in the press, which distorts the real situation.
Scrap dealers could have a gross profit of around 210 million euros this year, i.e. more than a quarter of total export earnings, according to available data and ECONOMICA.NET calculations. The scrap market is thriving in Romania, relatively indifferent to the crisis, or more thanks to the crisis and exports. The market is valued at €1.4 billion.
Gains result from differences between domestic and foreign scrap prices, as well as from exchange rate differences.
On the domestic market, scrap sells for up to 1.22 lei/kg, or about €270/tonne, at a rate of 4.52 lei/euro.
The best prices on the domestic market are (at least theoretically) those obtained through competitive auctions on the Romanian Commodity Exchange (BRM). The price of 1.22 lei/kilo was recorded in the last BRM auction on 5 June.
In contrast, exporters are selling for at least €100 more on foreign markets.
The average price of the last 3 months for South Eastern Europe is 473 dollars/tonne scrap , according to MetalPrices.com, which means an average of about 375 euros/tonne.
From the difference between the best domestic price and the external price, exporters will earn €210 million this year, if export volumes remain at around 2 million tonnes as last year, as some market operators believe.
Exporters will receive more than 750 million lei (3.393 billion lei, at an average exchange rate for 2012 of 4.52 lei/euro) for iron purchased for 2.44 billion lei, at a maximum purchase price of 1.22 lei/kg.

The energy crisis is driving up world metal prices.

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The price of copper was late this week nearing a 10-year high, while industrial metals from zinc to aluminium rallied amid growing concerns that the global energy situation will affect production, reports the Financial Times.
The price of copper surpassed $10,000 a tonne this week as traders gathered in London for LME Week, the metals industry’s annual event, and zinc rose as much as 10% to a near 15-year high. Aluminum traded at levels not seen since the 2008 financial crisis.
Industrial metals are benefiting from robust demand and supply disruptions from rapidly rising gas and coal prices, driving up costs for mines and smelters from Chile to China.
Nyrstar, one of the world’s largest zinc producers, said this week it will cut production by up to 50% at its three European smelters, while Glencore said on Friday it was «adjusting production to reduce exposure to peak price periods» at its smelters in Europe. Power outages in China have also affected aluminium production.
Such supply shortages outweigh concerns about global economic growth or a potential rise in interest rates, analysts said.
«Investors have jumped into metals based on expectations that production cuts driven by rising energy prices will offset the potential drop in demand if sentiment changes when interest rates rise,» said John Browning, an analyst at BANDS Financial in Shanghai.
Physical copper stocks on the London Metal Exchange fell this week to their lowest level since 1974, according to Kingdom Futures,because of strong demand. Goldman Sachs said in a recent report that metal stocks could reach a historic low by the end of the year and «will be fully depleted» by the second quarter of next year.
Copper stocks in LME-registered warehouses stand at just 14,150 tonnes, down from more than 200,000 tonnes in September. About 25 million tonnes of copper are consumed annually.
The CRU estimates that by the 2030s, copper use in wind turbines, electric vehicles and other «green» technologies will reach 6 million tonnes, representing 20% of global consumption.
Demand for copper is expected to grow by 2 to 3% in the next year, creating a shortfall of 6 million tonnes by the end of this decade.