COMMENTARY — Scrap bridges demand shortfalls

As is the case with other goods or commodities, scrap metal trading bridges the gap between domestic supply and demand. This gap is currently at its widest in the fast-developing countries of East, South and Southeast Asia, as well as South America.

From a quantitative point of view, the disparity between scrap supply and demand in these countries is a result of three developments: the material intensity of growth; the use of secondary resources; and the limited stock of domestically accumulated scrap.

While non-ferrous metal consumption per unit of gross domestic product has either declined somewhat or remained unchanged in most developed countries, it has more than tripled in developing countries since the early 1970s. This is primarily due to the patterns of industrial growth and to the creation of an appropriate technical infrastructure in these countries.

There is a tendency to meet a significant part of this material demand through scrap metals. Most developing countries are not endowed with primary commodities and energy resources. Secondary recovery is usually a much simpler and less costly process than primary production. At the beginning of the 1990s, it was estimated that the required annual investment required to yield one tonne of primary aluminum was about US$10,000, compared with an annual investment of US$500 per tonne to produce aluminum from scrap.

— The preceding is an excerpt from the newsletter of the International Council on Metals and the Environment.