Defaults among European consumers of secondary aluminum scrap
are expected to rise in 2013 as liquidity decreases and demand
for end-user products falls.
The issue is not limited to
countries hit hardest by the debt crisissuch as Italy and
Spainas it has already begun to affect countries in
Eastern Europe and the Commonwealth of Independent States,
In Ukraine, for example, the
scrap and secondary metal industry has been saddled with a
temporary export ban following a change of administration.
"Some of the companies really
have very big problems. As of the second half of December, they
will go on an extended holiday," said Karol Liptak, owner of
Koice, Slovakia-based trading company Steelinvest sro, on
the sidelines of AMM sister publication Metal
Bulletins 20th International Recycled Aluminium
Conference in Salzburg. "This is exceptional. Last year, they
were working right up until Christmas," he added.
Eastern Europe has traditionally
been viewed as the "workshop of the West," Liptak said, as
labor is cheap and the tax environment is relatively favorable,
attracting players such as Paris-based car manufacturer PSA
However, there are now thousands
of overdue payments in the region, as well as in the western
part of the continent, Liptak said, and margins have become
extremely tight as a result.
"We have to be very careful with
money. To sell is easy, but to collect the money is another
story. Were getting more and more defaults, and
weve grown into this situation throughout 2012," he said.
"We started quite wellthe first quarter was alright, the
second quarter was alrightbut then the third quarter was
a bit worse and the fourth quarter has been catastrophic."
The outlook for next year is not
encouraging, according to Liptak, and there are very few
reasons to be cheerful.
"Even Germany, which is the
leading European industrial country, has reported zero-percent
growth for the third quarter," he said.
"There is huge uncertainty in
Europe because of the financial problems in Greece and
elsewhere. The Chinese and the Japanese are afraid of Europe as
well, in case the situation gets any worse."
Closures and production cutbacks
are inevitable, he said, and Steelinvest itself is looking at a
25-percent drop in activity.
"We are very positive about East Asia, however, especially
Thailand. The Thai market has demand for aluminum and for
secondary aluminumits very high," Liptak added. "We
have sales there and we want to keep them growing. ... From my
point of view, there are no opportunities other than East
A version of this article
was first published by AMM sister publication Metal