Copper, aluminum pricing softens

While domestic demand for copper and aluminum scrap remains, pricing has softened since March, with Rick Dobkin of Shapiro Metals, St. Louis, writing in the Brussels-based Bureau of International Recycling’s “World Mirror: Non-Ferrous Metals,” released in mid-May, that the decline has been significant.

Despite that, “The U.S. regional premium has dipped slightly since March but is still near historically high levels, reflecting how freight and other supply chain costs remain elevated,” he continues. “Rolling mill and profile scrap spreads to prime have remained stable through the downturn in terminal markets. The demand side is still strong, with spot sales readily available for most items.”

Dobkin adds that metal input, transportation and personnel costs are supporting aluminum ingot prices despite suppressed automotive production related to the ongoing semiconductor shortage. “As secondary ingot prices climb, the gap to prime is narrowing, allowing secondary smelters to start dipping into lower grade mill scrap items. All secondary scrap prices have headed higher since March, although some items are less in fashion than others. Most recently, domestic scrap prices have been drifting lower as export markets are very quiet.”

“The U.S. regional premium has dipped slightly since March but is still near historically high levels, reflecting how freight and other supply chain costs remain elevated.” – Rick Dobkin of Shapiro Metals

Colin Denihan of Metal Source LLC, a Wabash, Indiana-based operator of scrap yards and producer of 356 and 380 aluminum sow and ingot and deox products, says much of the downward pressure on pricing is related to lockdowns in China designed to stop the spread of COVID-19.

He adds that Malaysia and India are not buying aluminum sow and ingot.

Dobkin writes, “Export business remains complicated, with wide swings in ocean freight costs and ongoing port issues. The dramatic fall in LME (London Metal Exchange) prices has put many buyers on the sidelines as Asian ingot prices are slipping.”

South of the U.S. border, Alejandro Jaramillo of Glorem SC in Mexico, also writing in the “World Mirror,” says, “The pronounced correction in LME aluminum prices has brought more scrap to the market at the same time as buyers are adopting a cautious stance amid a dropping market, demand uncertainty and elevated financing costs owing to higher interest rates.”

Dobkin says copper spreads in the U.S. market have remained stable despite the decrease in the terminal market. “Demand is still strong domestically for copper. Brass ingot makers are busy, with all mills aggressively chasing scrap units such that pricing remains strong.”

A wire processor based in the Midwest says scrap generation has been somewhat softer with the decline in price, even though it remains in the $4.25 per pound range.

“Domestic demand is still pretty high,” he says. “Copper foundries want material.”

The wire processor says delivery windows generally are available within 30 days, though spot market interest is not as strong. He attributes the soft spot buying to consumers having locked in contracts at the start of the year.