Out of equilibrium

Supply continues to outpace demand for many nonferrous scrap metals. The situation appears to be worse for aluminum scrap than for copper, with one Midwest-based scrap processing company source noting aluminum consumers’ order books as of mid-November are full into January and even into February in some instances.

Regarding copper scrap demand, another source based in the Midwest says consumers “are able to buy what they need at a spread they are more than comfortable with.”

He adds that scrap sellers used to be able to get 97 percent or 98 percent of the COMEX price for copper for their scrap when the market was at $300, adding that this is no longer the case. “There is not the same intrinsic value out of the mills” for copper scrap, he says, attributing that to the reduced buying activity of Chinese consumers. “China is not buying at the rate they were when the market was at $3,” he says.

The second source says orders for copper scrap are not as far out as those for aluminum, adding that it’s possible to sell a load into December as of mid-November. “There is plenty of scrap on the aluminum side. Scrap is plentiful on the copper side but not to the same degree.”

The first source says retail trade is slower this time of year as one would expect, but industrial generation appears to be steady, though about 10 percent lower than typical.

The volume of material arising from hurricane recovery efforts in the U.S. and the Caribbean will affect markets as well, writes Andy Wahl of Atlanta-based TAV Holdings Inc. and vice president of the Brussels-based Bureau of International Recycling (BIR) Non-Ferrous Metals Division in the BIR World Mirror: Non-Ferrous Metals for September/October 2017. But this effect may be seen more by auto shredder operators.

“A large quantity of metals will end up most likely being commingled and heading to car shredders in the affected states as a speedy cleanup is required and lengthy sorting/storage is not an option,” he writes, noting that this will increase the volume of zorba produced.

Regarding the trade of Category 7 scrap, such as discarded motors and plastic-coated wire and cable, the second source says January should bring a clearer understanding of China’s import quotas for this material. However, he adds, “The ability to place that material is difficult.”

“There is not the same intrinsic value out of the mills” for copper scrap. – a processor based in the Midwest

The source says uncertainty surrounding this material is causing some processors in the U.S. to invest in equipment that will allow them to produce higher-value products.

Another concern for scrap processors is the level of contamination in scrap shipments China will accept going forward. In mid-November, the Institute of Scrap Recycling Industries (ISRI) reported that the Chinese government notified the World Trade Organization of its intention to set contaminants thresholds for scrap imports. Under these proposed thresholds, contaminants in ferrous scrap would be restricted to 0.5 percent, while nonferrous scrap would be 1 percent, electric motors would be 0.5 percent and wires and cables would be 0.5 percent.

The first Midwest source says despite the release of this information, the situation still is a “grey area” and “further clarification is needed.”