Strength on the Home Front

While many nonferrous metals are being buffeted by growing uncertainty in offshore markets, there is relative calm for those scrap dealers who cater to domestic consumers.

For processors and brokers of copper scrap, optimism is springing from new capacity coming online in the United States. SDI LaFarga LLC, a partnership between Fort Wayne, Ind.-based Steel Dynamics Inc. and Barcelona, Spain-based LaFarga Group, will open a secondary copper refinery in Indiana in April. An East Coast-based scrap dealer says the refinery will consume a significant amount of copper scrap. Other new projects or expansions in the United States also will result in the manufacturing of more copper-based products.

The East Coast-based scrap metal recycler says aluminum and copper scrap are trading in fairly narrow ranges. “Markets (for copper and aluminum) have been in a tight trading range for the first quarter of the year,” he notes. Aluminum has been moving between $2,100 and $2,300 per metric ton, while copper has been trading at between $3.60 and $3.95 per pound during the first quarter of 2012.

The developments in the domestic copper scrap market are being matched with a rapidly decelerating Chinese market. During the past several months, the Chinese central government has been trying to rein in the country’s economic growth to prevent inflation. This has resulted in a downward trend in copper scrap demand.

Several sources say auto production has been good, which has helped to strengthen secondary aluminum demand. This is having a trickle-down effect on companies supplying parts for the automobile sector.“Auto suppliers are strong right now,” one scrap processor says.

One scrap dealer says aluminum extruders also have been fairly bullish regarding their business. “Extruders are optimistic,” he says. “They are telling their customers that order books are steadily improving.”

The improvement in aluminum extrusion markets may indicate that the housing sector is improving, though the scrap dealer cautions that it is too early to herald a recovery in the housing sector. In the recent past, he says, customers would not need more than their contracted amounts. Now, customers are supplementing their contracted supplies with spot orders.

Another scrap vendor says these moves indicate that some customers are restocking depleted inventories.

“Demand is strong for most grades,” one scrap dealer says of aluminum scrap.

He adds, “I think (aluminum) extrusion market spreads are tight right now. I also think that the auto industry has been a big help with the cast and sheet market.”

Stainless steel markets, especially those outside of North America, are in weaker shape than those for aluminum and copper. One stainless steel scrap exporter terms the offshore market “lousy.”

Outside the United States, especially in Europe, stainless steel production is soft and scrap supplies are limited. Going forward, a rebound seems unlikely.

(More information on nonferrous metal markets, including consuming industry reports and breaking news, is available at www.RecyclingToday.com.)