Transportation still poses challenges

Domestic demand for red metal scrap remains healthy, while high prices and container shipping issues are making it difficult for export buyers to compete for material, some sources tell Recycling Today.

An insulated copper and aluminum wire processor based in the Midwest says scrap generation remains steady as the economy rebounds from the pandemic related recession in 2020.

“There is very high demand for copper and brass scrap,” he says. “With this high demand domestically, I do not see any problems selling or delivering material into foundries.”

The processor says he’s noticed demand for bare bright copper decline as its price has risen. “It appears people would rather buy No. 2 copper scrap, and [they] appear to be able to be flexible with how they use their raw material to make their finished goods.”

“The nonferrous scrap situation is driven by logistics challenges we are all facing; it’s less about supply and demand.” – Scott Greenberg, Greenland (America) Inc.

Trucking remains a concern for scrap processors and consumers, the contact in the Midwest says. “Transportation availability is still extremely tight, and the prices are up about 30 percent to 70 percent on any given run.”

He continues, “I do not see this phenomenon ending for at least another six to nine months.”

While export demand is subdued, he says export opportunities are available. Pricing is less of a consideration for overseas consumers than the ability to get a booking on a shipping line.

Scott Greenberg of Atlanta-area brokerage firm Greenland (America) Inc. says containership lines are “randomly rolling bookings without notifying folks oftentimes.” This leaves suppliers “between a rock and a hard place” as their containers incur detention fees at ports while they await the next booking, he says.

The degree to which shipments are delayed varies by route and commodity, Greenberg says. He notes that shipments to Pakistan seem to experience significant delays compared with those to India.

“There is plenty of scrap in the marketplace,” Greenberg says, but its movement is obstructed by logistics issues.

In the case of repeatedly rolled bookings, Greenberg says it creates a dynamic where the contract between the buyer and seller starts to get old, raising uncertainty about whether it will be honored. “The industry standard is 30 days. Is the contract still valid if it goes to 60 days?” he asks. “Everyone is going to do what is in their best interest if the market is heading down.”

Greenberg adds, “The nonferrous scrap situation is driven by logistics challenges we are all facing; it’s less about supply and demand.”

Regulatory issues also are affecting the movement of material globally. Greenberg says that as of the third week of January he’s heard nonferrous scrap importers in Malaysia are saying customs agents at some ports are not releasing loads.

Two traders based in Asia also have shared stories of such incidents with Recycling Today Senior Editor Brian Taylor.

The Malaysian government enacted scrap inspection and purity standards the second week of January.

A trader tells Taylor the clearance delays are a concern, but Malaysian buyers have not yet signaled panic regarding the situation.