The US-Australian scrap metals giant Sims Metal Management revised its earnings forecast downward early this week . It was now predicting that its results for the first half of its 2020 financial year will be “materially lower than 1H FY 2019”. The correction was the results “significant falls in ferrous and non-ferrous prices”, especially since the beginning of September. The concern also said it was possible that suppliers could withhold volumes from the market at current prices.
Less than four weeks ago, steel mills had appeared to be managing the lower demand brought on by escalating trade wars between the US and both China and Europe, said CEO Alistair Field. However, at the start of the new month they had “materially reduced their scrap purchases and also their outlook for scrap purchases”, triggering a steep fall in prices. Business was being made more difficult by a “consistent rise in deep sea freight prices over the last month,” he said.
Mr Field anticipated a medium-term recovery, but said it was too early to predict whether the impact of current market conditions would extend beyond the first financial half, which ends on 31 December.