Clear Sailing

The trend in nonferrous metals markets continues to point upward through the end of the year. According to a number of sources, market fundamentals are positive, with key economic drivers steadily improving.

“I don’t see anything putting a damper on things for the rest of this year,” one scrap dealer says. “A good measure of the business is the number of phone calls I receive. Now, I am receiving calls on a regular basis.”

Several sources say they foresee steady to strong nonferrous metals markets through the end of 2011.

While modest corrections have occurred when nonferrous metals reach near-term pricing highs, the metals’ strength ensures a fairly high floor price, particularly for copper.

Another scrap metal recycler says many industrial facilities will close for maintenance in August, which will take supply off the market.

Demand for copper has been fairly good, with buyers for Chinese consumers continuing to purchase blocks of the metal. Domestic consumers also have been buying scrap steadily to meet their needs.

According to U.S. Census Bureau figures, during the first four months of 2011, the value of copper scrap exports reached $1.6 billion, a 54 percent increase from the same time in 2010. The Census Bureau data also show that from January 2011 through April 2011 the value of aluminum scrap climbed by 42 percent to $1.3 billion.

One dealer says China currently buys as much as 60 percent or even more of the copper scrap generated globally.

Several traders say some buyers for Chinese consumers are reluctant to pay higher prices for copper scrap, though Bloomberg reports that Shanghai Futures Exchange copper warehouse stocks have increased in June and early July. As of the middle of July, these inventories increased by 22.3 percent from the previous week.

With copper prices still fairly high, some buyers for Chinese consumers are steadily buying material in an effort to keep a check on prices. This may keep copper prices from climbing too high in the short term. However, several sources say they expect copper scrap prices to near $5 per pound by the end of 2011.

Generation has been fairly good for a number of nonferrous metals, though some dealers say copper generation has lessened.

Inventory levels at London Metal Exchange warehouses remain high, though a number of sources say potential supply disruptions could result in shortages of the metal.

A dealer based in the Midwest speculates that much of the copper that had been inventoried in the anticipation of better prices has entered the supply chain, leaving less material available now. However, several other scrap metal dealers based in the Midwest say generation continues to improve overall, though it is down from 2007 levels.

One of these dealers estimates that prices for some nonferrous metals have increased by 25 percent so far in 2011. Secondary aluminum markets continue their rebound, and prices have been climbing throughout the past several months. However, the Midwest-based dealer adds, stainless steel scrap has lagged behind other nonferrous metals in terms of price increases.

Despite nickel prices being fairly healthy, several stainless steel scrap dealers express a bleak short-term outlook for the metal. One trader who specializes in stainless and specialty alloys says stainless steel producers continue to do a poor job of running their businesses. He says stainless steel mills’ production schedules result in a feast-or-famine scenario, where stainless steel producers look to push finished product prices as high as possible when they can, but then curtail scrap demand as prices climb too high.

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