For much of this year, recyclers have been facing growing uncertainty, whether it pertains to the U.S.-China trade war, China’s ever-changing import quotas and restrictions or what appears to be a softening global economy.

A more recent development that has amplified that uncertainty was the General Motors strike, which as of mid-October was in its fifth week. However, a tentative agreement between the United Auto Workers and GM was reached as of Oct. 16, though the union had yet to vote on its ratification as of press time.

According to one source who works for a company with operations in the Midwest and Southeast, the strike was affecting aluminum production at secondary and primary mills as of mid-October. This was unwelcome news given the already soft demand scrap dealers have seen from domestic scrap consumers for much of the year. Decreased prompt scrap generation did little to address the oversupply of material that has characterized the domestic aluminum scrap market this year, the source adds.

“Recession or not, few signs point to positive changes in the scrap metals sector in the months ahead.”

The Trump administration also announced that it would impose a 50 percent tariff on steel imported from Turkey in response to that country’s actions in Syria. However, as the New York Times reported Oct. 15, “The measures announced by the president are unlikely to destroy the Turkish economy, as he has warned, but plenty of other existing threats could. Economists have long regarded Turkey as a bubble waiting to burst because of government mismanagement, an inflated building boom and a shaky currency.”

Purchasing managers indices (PMIs) point to slowing economic growth globally. The Institute for Supply Management’s (ISM’s) September PMI was 47.8 percent, a decrease of 1.3 percentage points from the August reading of 49.1 percent. Figures below 50 indicate a contraction. Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, says, “Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019.”

The U.S. PMI was consistent with that of the eurozone, which saw manufacturing contract to an 83-month low of 45.7, according to IHS Markit.

“I think risks are awfully high that if something doesn’t stick to script then we do have a recession,” Mark Zandi, chief economist of Moody’s Analytics told Bloomberg in mid-October. “I’ll say this also: Even if we don’t have a recession over the next 12 to 18 months, I think it’s pretty clear that we’re going to have a much weaker economy,” he added.

Recession or not, few signs point to positive changes in the scrap metals sector in the months ahead. How does your company plan to navigate the uncertainty that lies ahead?