Reaching new heights

While the aluminum scrap market was somewhat lackluster in 2023, it has been strengthening more recently along with copper.

A metals trader based in the Southeast told Recycling Today earlier this year that the copper scrap market throughout 2023 was “touch and go,” with 2024 starting similarly, while John Gross of John E. Gross Consulting and “The Copper Journal” predicted the continuation of a bear market for the metal in 2024.

That has not been the case, however.

“If this isn’t a bull market, I don’t know what a bull market is,” says Joel Fogel, vice president of nonferrous at Middletown, Ohio-based recycler Cohen.

“I don’t think we’ll ever see $2 copper again. But is it sustainable, $5-plus copper or $4.50-plus copper? I don’t know the answer to that. … But there certainly is a new baseline.” – Joel Fogel, vice president of nonferrous, Cohen

In his April 26 edition of “The Copper Journal,” Gross writes: “The nonferrous family is no stranger to volatility, and it seems to us that copper is very near or already in the danger zone. … After spending a year going back and forth in a 50-cent range between $3.50 and $4, spot copper soared nearly 60 cents in just a few weeks after breaking to the upside. And with the higher price, volatility has climbed right along with it.”

That trend continued through mid-May. As of May 14, spot copper on COMEX closed at a record high of $4.95, surpassing the previous high of $4.93 set March 4, with Gross noting copper is up 28 percent from the start of this year.

Fogel says over the last couple years, analysts continually have said copper was in a shortage and its price would increase as a result, with some forecasting it would reach $5 per pound.

“It’s really never even touched that or gotten near that over the last couple years, and [the week of May 17], it did,” he says in mid-May. “I don’t think we’ll ever see $2 copper again. But is it sustainable, $5-plus copper or $4.50-plus copper? I don’t know the answer to that. … But there certainly is a new baseline.”

The situation has created what Fogel says are some interesting dynamics. “There’s big backwardation between the current months and the future months on the COMEX, and then there’s even more of a backwardation or a negative arbitrage that relates to the LME [London Metal Exchange] and Shanghai [Futures Exchange],” he says. “So that’s really interesting because when you’re shipping copper to the European refiners, they’re basing everything off of LME, not off of COMEX,” which most scrap sellers in the U.S. base their pricing on. He notes copper was priced as much as 39 cents higher on COMEX compared with the LME recently.

Regarding aluminum, Fogel says mill demand is outpacing scrap supply. “Export is very, very active in some of these grades too, which is pushing the domestic market up.

“I think everybody’s looking for units and normally this time of year we have the mill shutdowns: the old adage ‘Sell in May and go away,’” he continues.

In response to that need, Fogel predicts mills will be buying actively through June and July rather than shutting down and curtailing buying.