The Global Trends that will shape the recycling market in 2023

Scrap metal is a volatile marketplace, influenced strongly by the global economy.

Whether it is the supply and demand from major economies such as the United States of America or China, or mining of primary metals, or even foreign exchange and shipping, those in the market need to keep a close eye on global trends.

Now we are at the start of 2023, it is a good time to look ahead to what this year, and future years, will bring. An excellent place to start is a report written by global trend-watcher Vikram Mansharamani for US recycling trade association ISRI (Institute of Scrap Recycling Industries).

In his report Global Trends & Implications for Recyclers, Vikram looks at several high-impact global trends and the implications of these trends upon the recycling industry.

Here we summarise his report.

Inequality, Inflation & Social Pressures

A focus on free trade and open markets in a globalized economy has led to inequality, especially in developed nations.

American middle-class families have seen stagnant incomes for decades, while working class citizens around the world have not benefitted from economic growth. Although growth has been seen in China, and the world’s wealthiest people have seen their incomes rise, there is a view that the rising tide has not lifted all boats.

Since the COVID pandemic, indicators have suggested that equality is getting worse, especially so given rising inflation exacerbated by the Russian invasion of Ukraine. 

With Central Banks and governments introducing fiscal sobriety, reducing monetary stimulus and higher interest rates, this is likely to slow economic activity. 

However, this economic contraction is likely to reduce demand and then bring down inflation. Improvements along the global supply chain should also break down any bottlenecks that currently exist.

Increasingly, companies are recognising that they must be run for the benefit of the environment, their employees, and the communities in which they operate, and not just their shareholders.

Geopolitical Realignment & Shifting Trade Patterns

Russia’s invasion of Ukraine led to sanctions against the former, hitting supplies of oil and gas to Europe especially.

Before that, there was an emerging China-Russia-Iran alliance that was causing countries to pick sides between the shifting geopolitical alliances.

An outcome of this is the emergence of two global economies, one led by China and another by the Western Democracies. 

Businesses are already facing up to this possibility and are increasingly dropping the lowest-cost, just-in-time, most efficient supply chain strategy they used previously. Instead, they are now looking at dynamic, just-in-case, resilience-focused approaches that often leads to bringing supply chains back closer to home and away from volatile economies in nations led by autocratic governments. 

Trade flows are likely to shift with American industries with the greatest dependence on China – pharmaceuticals, semi-conductors, rare/critical materials, and consumer goods - likely to be produced in friendlier nations. China seems more likely to shift its dependence on American agriculture to buy food from countries such as Russia.

Environmental Justice

The idea of everyone enjoying the same protection from environmental and health hazards is not a new one.

One of the key ideas of Environmental Justice from the principle above, is should we be sending our used goods and materials to developing nations.

Increasingly, countries are putting in tougher rules on inspections and quality of recyclate. The EU (European Union) and UK (United Kingdom) (United Kingdom) have also announced their intention to ban plastic exports by 2027 for example. China banned import of plastics in 2018, followed by metals and paper in 2020 (it subsequently partly reversed the scrap metal ban).

This will also raise debate about the issue of exporting electrical goods to developing nations. While there are development opportunities from sending usable electronics to these nations, it must be done without the risk of polluting them.

Increasing legislation on exports of goods and materials such as scrap metal, is likely to continue.

Materials Scarcity & National Priorities

Providing a secure, stable, and greener manufacturing supply chain will have the recycling industry at its core. 

Demand for recycled materials will therefore have a strong tailwind for years to come.

To meet net zero goals, electrification of our transport and infrastructure will see more demand for copper, aluminum, lithium, cobalt, and steel. Rare earths and critical minerals will also be needed.

With potentially higher scrap commodity prices, this should lead to greater innovation to recover even greater amounts of recycled materials from products. 

Rather than importing steel, it is likely to become more cost-efficient and secure to recycle it closer to where it is needed. 

Export bans and restrictions are likely to increase, especially to secure scrap materials closer to domestic markets. In a world of increasing competition for scarce resources, recycling will be seen to reduce imports and provide national industries with the raw materials they require.