Nonferrous Markets

While platinum, gold and silver are considered the precious metals, their usually more plentiful nonferrous cousins aluminum and copper are taking on collector’s item attributes.

Dealers from throughout the U.S. report tight aluminum and copper scrap supplies, while demand from overseas buyers continues unabated. It is unclear whether a domestic manufacturing resurgence might increase scrap volumes—though such a scenario is also likely to increase nonferrous scrap demand at domestic smelters, mills and refineries.

In any event, pricing entered 2004 on an upward course, and the declining value of the U.S. dollar has created the hope that a domestic manufacturing resurgence (based on exports) might be possible in the near term.

Any U.S. resurgence might be considered secondary to China’s powerhouse industrial sector.

One East Coast scrap dealer says, "Not that long ago, U.S. market conditions came first when calculating commodity prices, then the rest of the world. Now China is first, then the rest of the world."

He says Shanghai nonferrous scrap prices spent several months running above U.S. and European prices, while buyers in those countries waited for Shanghai to "get back in line" with New York and London pricing. Instead, North American and European pricing has escalated to catch up with the Shanghai pricing. "Shanghai was correct while the rest of the world lagged in its demand and pricing," he remarks. "Chinese buyers will do what needs to be done to procure metal—They need to have the copper units to keep running."

During much of the price run-up, the consensus seemed to be that dealers were enjoying good margins on the sale of scrap, while consumers were being squeezed by high scrap prices and stagnant finished product pricing.

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The chief dealer complaint continues to lie in the difficulty of procuring scrap, with most dealers preferring the higher pricing climate as a potential margin-builder.