This Key Note Market Report examines the UK metal recycling market, which
reached an estimated value of £2.41bn in 2008. The volume of scrap metal
consumed in 2008 stood at 5.6 million tonnes — 6.4% below the 2007
estimates, which were at their highest level since 2001 at just over 6 million
tonnes. The negative growth in 2008 spelled the end of the run of a rising
period of recycled metal sales, and the start of the recession in UK
manufacturing output. In value terms, scrap metal consumption declined by
3% in 2008 from a 10-year high of £2.49bn in 2007. Between 2004 and 2008,
overall sales of scrap metal have increased significantly, boosted by the high
rise in the value of scrap metal during this period, particularly in 2005 and 2006.
For the purposes of this report, the metal recycling market is divided into the
broad categories of ferrous and non-ferrous metals. The ferrous metals sector
comprises iron or steel, and the non-ferrous category includes six types of
metal: aluminium (the largest non-ferrous subsector by volume), lead, copper,
zinc, nickel and tin. The report also includes references to precious metals such
as gold, silver, platinum and palladium.
Metal recycling has traditionally been one of the most profitable sectors of the
recycling industry in the UK, with steel scrap having the highest recycling rate.
The market has been driven by large-scale home recycling encouraged by local
authorities that have pledged to meet the Government’s set targets, and the
metal producer schemes for steel cans and aluminium have made it easier to
obtain metal for reprocessing. The UK has become a net exporter of metal
scrap, boosted by strong demand for scrap metal in the People’s Republic of
China (PRC) and other Asian countries, as well as the weakness of sterling
against the euro and dollar.
The recession in the UK and the global economic downturn in 2008 had a major
effect on the UK and international metal recycling markets. Prices tumbled in
2008, with contracts cancelled and steel, aluminium and other metal producers
shutting down excess capacity. This was in stark contrast to the previous year’s
buoyant conditions of high prices and demand for recycled metals.
The current recession in the UK is expected to have a continued negative
impact on the metal recycling market well into 2009, before gradually
recovering as key export markets such as the PRC begin to pick up. Three
general factors lying outside the economic cycle that will have a strong
influence on the market in the future are: increased adoption of newer and
sophisticated metal recycling equipment; further environmental pressures to
encourage people to recycle more metal; and EU and UK legislative changes
to reduce barriers to UK exports of recycled metal and impose tighter controls
on the metal recycling industry. Key Note forecasts that the market will
contract by 12.5% by volume in 2009, but will increase by an overall 24.6%
from 4.9 million tonnes to 6.1 million tonnes between 2009 and 2013.
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