Metal recycler says it's boom time for scraps

Hong Kong

CHIHO Environmental Group, one of the world's biggest metal recyclers, says rampant demand for scrap material is set to strengthen as the global rush to fight climate change becomes more urgent.

The Hong Kong-listed company sees a flurry of net-zero targets from governments and corporates accelerating the demand for scrap, as supply chains scramble to source cleaner materials. This comes as the industrial rebound from the pandemic boosts metal prices from copper to lithium.

"We have gone through two world wars, two major economic shocks. Now we have a pandemic and we see one of the most significant demand boosts ever for recycling metals," chief executive officer Rafael Suchan said.

The company in 2016 acquired Germany's Scholz Holding GmbH, which traces its origins back to 1872.

Chiho expects steel scrap volumes and recycling rates for aluminium to roughly double in the next five to 10 years in China.

The country has been snapping up more steel scrap after restrictions were relaxed at the start of the year, while the nation's top copper smelters last month recommended a limit on new capacity and the use of more scrap to help meet the country's climate goals.

The nation will be the biggest scrap recycling market, as well as the largest consumer and the driver of commodities, Mr Suchan said.

He expects relatively stronger recycling demand for non-ferrous metals rather than ferrous materials in the current commodity cycle.

Steel demand will grow moderately, while China is set to export much lower volumes, he said, given the environmentally-driven hike in taxes effective from this month.

Demand for copper and aluminium will rise significantly to meet the electric vehicle (EV) market, as new infrastructure that requires more non-ferrous materials was needed, said Chiho.

The company is also looking to improve its EV battery recovery rate to 90 per cent or beyond from its current 60-70 per cent level, adding that it is in discussions with battery and automotive groups, as well as metals producers to develop partnerships regarding the supply of recycled raw materials.

Meanwhile, the recycler has been approached by plastics and rubber producers, who are "feeling the pressure" to become more circular, said Mr Suchan. BLOOMBERG