Slow Speed Ahead

Nonferrous metals appear to be in a holding zone. Moving into the early summer months, a number of scrap metal dealers say their biggest concern is the lack of generation of aluminum, copper and most other nonferrous metals.

Prices continue to be somewhat volatile, with copper and aluminum trending toward the downside.

Despite the lack of aluminum scrap generation, scrap dealers say prices have fallen to levels not seen for several years. However, consumers of aluminum scrap are running at moderately better schedules, creating supply tightness and narrowing margins. One Midwestern scrap dealer observes, “the spreads between secondary aluminum and primary aluminum continue to tighten.”

Several sources say the price of aluminum fell to 93 cents per pound in May on the London Metal Exchange (LME), with little sign of a rally in the near future.

“The flow is not good,” a scrap dealer in the Midwest says.

Aluminum scrap markets are benefitting from strength in various industries that consume the metal. The auto sector, several dealers say, is keeping movement of aluminum scrap fairly stable. Several other scrap dealers say improvements in the aerospace industry, as well as better billet and extrusion markets, have helped their businesses. “There is demand on the mill side,” a large aluminum scrap processor says. “Mills are busy, and secondary ingots are in good demand.”

A scrap dealer in the Western United States says nonferrous markets saw a “big pull back” in late spring, with aluminum prices at their lowest levels in some time. Despite this, he adds, “Domestic mills keep buying everything available. Markets are in good balance right now.”

Several exporters say the sovereign debt problems in the eurozone have curbed the flow of aluminum scrap in that region. With little signs of improvement in many European economies, a number of scrap metal dealers say they expect Europe to be a fairly challenging market during the next several quarters.

In addition to the difficulties in Europe, according to reports, China continues to put the brakes on its economy. From double-digit growth to single-digit growth, China’s economy may be cooling far more than previously anticipated.

One large exporter of nonferrous metals says recent figures show overall imports into China have declined by nearly 0.5 percent, while the country’s exports, primarily to Europe and the United States, have dropped by a much sharper 5 percent.

As with aluminum, a number of copper recyclers say new supply is harder to come by. Copper markets remain volatile, though several scrap metal dealers say the metal is moving in a trading range of $3.64 to $3.85 per pound.

A copper scrap dealer in the upper Midwest says domestic demand for copper is good, with the exception of No. 2 copper, which is seeing demand lessen. The domestic market could see significant improvement going forward, as Fort Wayne, Ind.-based Steel Dynamics Inc. is nearing the opening of its secondary copper smelter in Indiana. One source says the company, through its OmniSource operation, has been buying copper scrap during the past several months for inventory.


 

(More information on nonferrous metal markets is available at www.RecyclingToday.com.)

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