Extended delivery

Aluminum and copper scrap processors still report having difficulty placing material with domestic consumers as of mid-December, though material continues to flow into their yards.

They attribute the difficulty placing material to a full domestic market and to uncertainty regarding Chinese import regulations.

A processor in the Southwest says the domestic market is flooded with chopped copper because of shipping restrictions on insulated copper wire into China.

Regarding the aluminum grades the company sells, he says used beverage containers (UBCs) have been difficult to sell except to converters, which has been the case for most of the year.

The processor adds that he’s heard many domestic consumers are experiencing money problems, as recently seen in the Chapter 11 bankruptcy filing of Real Alloy, Beachwood, Ohio. His company was among those the company owed money to.

Despite the lag he’s seeing placing material with consumers, the Southwest-based processor says the flow of material into his yard has been “robust for the last quarter.”

A processor based in the Midwest also says generation has been good. “A lot of material is available for purchase. Material is flowing in in droves.”

However, he also mentions that orders are 30-to-60 days out. “It’s been that way in aluminum and copper for a while now. I can get orders, I just can’t deliver it for long periods of time.”

The processor adds, “A lot of people in our industry are sitting on scrap that is sold but just can’t be shipped.”

Export orders also have been pushed out as many as 60 days, the Midwest-based processor says. “The export market has definitely slowed. It is not as aggressive for the lower-grade items because China is making decisions on what they do and don’t want.”

“A lot of material is available for purchase. Material is flowing in in droves.” – a processor based in the Midwest

Regarding China’s buying, the Midwest-based processor says, “I don’t really see that getting any better. I’ve only heard rumblings that China will be taking less and less as the calendar flips.”

Slow scrap sales mean inventories are accumulating at operators’ yards, creating cash flow and space issues. The processor in the Midwest says his company has become more selective in buying as a result. “In a perfect world, material would be coming in, getting processed and shipped out. Now it is more of a buy-and-hold situation because delivery is so backed up,” he says. “Like most companies, we are always in the market for scrap, but we have to be strategic about moving it so we can maintain cash flow.”

Both processors say obtaining trucking has been difficult, with the one in the Midwest noting it has been especially tight since Thanksgiving.

“I didn’t think it could be worse than it was in May,” the processor in the Southwest says, adding that it’s common for appointments to be rescheduled multiple times.