Spotlight on Gold Recycling
Chapter 4 - Regional Division of Recycling
- The four largest regions for recycling in the period 2010-21 were East Asia (26% of the global total), the Middle East (23%), Europe (18%) and North America (12%).
- This differs to the division of jewellery consumption, chiefly on account of the West’s large (if now depleted) pool of jewellery and Indian consumers’ preference for exchange.
It is widely known that India and China dominate gold jewellery consumption (in the period 2010-21, these two on average accounted for 56% of each year’s global total). However, their share of total recycling is much lower at 19% over the same period, even though, as noted earlier in this report, old jewellery is the dominant source of scrap.
In contrast, western recycling accounted for 30% of the total for 2010-21 in comparison to just 12% on average for its jewellery consumption.
This apparent discrepancy is chiefly due to two factors. Firstly, a long history of sizeable jewellery consumption in Europe and North America means that the pool of product in those regions is proportionately much larger than is the case for jewellery consumption today. Secondly, India’s scrap is comparatively low due to the large volume covered by exchange (which is not included in our statistics, see chapter 2 for more detail). There is also a strong cultural reluctance in the country to sell these quasi-investment assets unless absolutely necessary. Lastly, a well-developed gold loan sector means that it is easy to pledge jewellery for loans in India and this is the preferred route to tide a household through lean times.
The reader will have noticed that this anomaly is less pronounced in more recent years (western scrap accounted for 25% of the global total during 2017-21). This reflects the extent to which the boom in western recycling that occurred in 2010-12 drew out a high share of near-market stocks (those pieces that a household is happy to sell). Historically high consumption and a consequentially large pool of mostly 18-carat product also largely explains why, within the West, Italy is so important, being the largest source in Europe and on occasions exceeding the US.
Regional scrap supply
Source: Metals Focus
The Middle East also punches above its weight for recycling (in 2010-21, it accounted for 23% of global recycling compared to just 14% of jewellery consumption). Unlike the West, this is not a pool of product story, but more a reflection of the various crises that have undermined economies and thus boosted scrap (such as currency devaluation in Egypt and Turkey and sanctions against Iran).
On the subject of crises, this report would not be complete without mention of the regional impact of COVID-19. Of note here was the economic damage done in Thailand, which in conjunction with a long tradition of two-way trading in jewellery made the country the fourth largest supplier of scrap in 2020. There were also marked differences between countries according to whether the boost from economic damage was sufficient to counter the negative of disrupted logistics.
In the West for example, consumer reluctance to visit scrap collectors and a slump in the need to visit pawnbrokers due to government support meant that US scrap in 2020 fell by 14%, whereas in Europe it rose by 2%.
A final point to consider in the distribution of scrap concerns the scale of each country’s jewellery fabrication. As noted earlier, the vast majority of recycling comes from individuals and it is typically only in a crisis that sizable volumes are received from fabricators. However, that still means those countries that are proportionately more important in terms of fabrication such as Thailand and Italy can move up the recycling rankings should jewellery producers be obliged to melt stocks.
Regional scrap volatility comparison
Source: Metals Focus