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.

Climate Change, Sustainability & Electrification

Due to the impact of climate change, many around the world are looking for sustainable solutions such as zero emission vehicles, solar and wind power, and battery storage.

This is leading to more demand for lithium, nickel, cobalt, copper, and steel.

Steelmaking is also moving away from electric arc furnaces and especially those fired by coal. Many now see hydrogen as an opportunity for providing the energy needed to produce steel.

With steel increasingly seen as a sustainable material, there is a bright future for the recycled ferrous metal sector.

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.

Technology, Digitization & Data

Technology adoption is growing rapidly. Our rapidly digitizing world and the internet of things promises to connect everything with everything else. 

Sensors will be ubiquitous, and the amount of data will explode. 

A benefit of technology is that is makes people’s lives and businesses more efficient. It helps to boost productivity and increases supply of goods. 

But more use of technology is also leading to greater need for security of our data and our processes. Companies are making significant investment to protect their businesses to ensure they continue the efficiency and productivity gains that digitization brings them.

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.

How does this impact on the recycling industry?

As countries look to reduce their dependence on potentially hostile nations, and minimize imports of materials from them, there will be greater focus on recycling what is already here.

This presents challenges, but also huge opportunities for the recycling industry.

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.

Electronic Recycling & Data Protection

Computers and personal devices contain vast amounts of personal data these days. But so too do vehicles, including addresses, contacts information and where the vehicle has been.

For auto recyclers and shredders, there are likely to be more processes to remove data, apart from just a magnetic data deletion to ensure the data is fully destroyed. 

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.

Dynamic Business Models

Companies are starting to prioritize resilience and self-reliance over efficiency. An example is General Motors deciding to invest in a battery recycling ecosystem in North America to secure its supply of materials to reach its goal of 100% electric vehicle production by 2035. 

Disruption and shifting business models are a certainty. For business leaders in the recycling sector, they must think about how industry structures will change in response to these global trends. 

AMCS is delighted to welcome Vikram Mansharamani as our keynote speaker for the AMCS Inspire webinar about Trends in the Global Recycling Market. This event will be held on 31st March at 1 PM EST | 10 AM PST. Please register here for this exciting webinar.