Recent hurricanes in the US, and the earthquake in Mexico, were expected to provide a strong supply boost to the scrap metal market. The reality however is quite different, with demand for scrap metal, rebar and steel products far outstripping supply. With a relatively unhedged industry, and little use of futures, the industry is likely to have a turbulent few months in terms of supply. Ravaged roads and infrastructure will see a slower flow of material through to recyclers. Insurance assessments need to be completed and transport and logistic companies are still struggling to come to terms with the demands on their business. The market is likely to have some volatile months.
In this environment of natural disasters the discussion around futures trading has gained new momentum. The London Metal exchange introduced futures contracts in 2015. Whilst trading is expanding slowly the recent disasters serve as a call for the market to reconsider them as hedging tools.
Recycal continues to monitor global trends, as unforseen and destructive acts continue to impact the scrap metals market. Risk management is a key management process for Recycal, with the continued growth of the company. Recycal is very aware of the need to ensure continuous supply of product through its supply chain to its expanding customer base.