Not as bad as expected

Nonferrous scrap processors and traders contacted by Recycling Today in mid-May say they were bracing for April to be much more painful than it was in light of lockdowns and reduced manufacturing activity related to the COVID-19 outbreak. However, that’s not to say it was pain-free.

“Things didn’t drop as bad as we thought they might,” says a metals trader with a company that has operations in the Upper Midwest and Southeast.

When asked how his company has been fairing since the onset of the pandemic, a contact with a wire chopping operation based in the Midwest responds, “We’re doing. Is that a good enough answer?”

He adds that his company was fortunate to remain open, though the social distancing requirements don’t equate to efficient operations.

“Our business is hugely influenced by aerospace, automotive and construction. Those three industries are suffering right now, none more so than auto and aerospace.” – a West Coast-based processor and trader

“We’re doing everything we can to be as safe as possible,” a scrap processor and trader based on the West Coast says of his company’s operations. “It takes time and effort,” he adds, referring to the housekeeping and sanitization required to ensure worker safety.

The West Coast source says his company has not had to furlough workers, though intake is down 30 to 40 percent. “We’re still managing to accept, receive and ship out metal.”

“Volume could be better,” the Midwest-based wire chopper says. “We’re getting material in, but the volume is not what it was compared to six months ago or a year ago.”

The trader says his company’s retail operations in the Upper Midwest are reopening in mid-May after having been shut down since late March. In the Southeast, where the company’s operations were able to open in early May, he says retail traffic has bounced back to roughly the level it was at before the lockdowns. As a wholesaler and broker, his firm has felt the effects most acutely in the shutdown of other scrap dealers’ retail operations.

Volumes have been reduced by roughly 40 percent on the nonferrous side in the Upper Midwest, while ferrous has stayed relatively consistent, he adds.

“April was spent fulfilling March orders,” the trader says, adding that the company had few new sales. “We sold less in April than in any month in a long time.”

All three men mention the lack of activity in automotive manufacturing and the effect that is having on the aluminum scrap sector.

“Our business is hugely influenced by aerospace, automotive and construction,” says the West Coast source. “Those three industries are suffering right now, none more so than auto and aerospace.”

The trader whose company has operations in the Upper Midwest and Southeast says secondary aluminum mills are “pushing off deliveries until they have more insight into when they can ship finished products.”

“Some of the larger aluminum billet manufacturers are really hurting, certainly out on the West Coast and in the Midwest,” the West Coast-based source says.

Consumers are still taking contracted orders, the Midwest-based processor says, though deliveries have been delayed.

Red metals scrap is faring better by comparison. “Copper demand is still relatively strong,” says the trader whose company has operations in the Upper Midwest and Southeast. “Supply is still relatively weak.”

“Red metals are trading, and the prices seem to be—I’m not sure I’d call it stable—holding at a certain level,” the West Coast-based source says.