Sluggish demand continues

Nonferrous scrap markets continue to look bearish, U.S.-based scrap traders and recyclers say, though they indicate that the copper scrap market may be in slightly better shape than aluminum.

As one positive sign, prices for copper on the London Metal Exchange (LME) indicated a slight rally in early September, climbing to $5,277 per metric ton on Sept. 8. The rally was tied to news that commodities firm Glencore PLC of Switzerland was cutting production at two African mines.

Meanwhile, LME prices for aluminum alloy reached a low of $1600 per metric ton in late August before also rising slightly in early September.

However, U.S.-based traders of nonferrous scrap still have few positive comments to offer about recent market movements.

David Chiao of Atlanta-based Uni-All Group Ltd. and president of the Bureau of International Recycling (BIR) Nonferrous Division, says, while the copper scrap market seems stable, aluminum continues to be affected by currency fluctuations pitting a strong U.S. dollar against the Japanese yen and the Chinese yuan. The two countries are the most important consumers of aluminum scrap, Chiao adds.

“From my understanding, a lot of customers in China are using more aluminum ingots to make aluminum alloy instead of scrap,” Chiao says. The situation, he adds, has made U.S. recyclers more dependent upon domestic consumption at a time when overseas pricing is lower. A key point, Chiao says, “demand in China is terribly low.”

However a recycler based in the U.S. Midwest sounds a slightly more upbeat theme, noting that his company still is able to find buyers.

“It’s not too far out of the ordinary,” he adds, citing demand from secondary producers. “The price of their production has been dropping, so there is negative pressure on the price we can get for our scrap, but they’re still buying,” he says.

Similarly, the recycler says demand for mixed metals like zorba also is present to some extent, though volumes and prices are down.

“For the most part, the scrap that we are able to generate we are able to sell and ship in a somewhat timely manner,” he says.

But he adds that prices haven’t seemed to hit bottom yet, with many of the tonnages that used to be exported now remaining at home.

Copper scrap markets, meanwhile, Chiao says, seem to have struck a balance, even though that balance is at a somewhat lower level.
 

Similarly, the Midwest recycler says demand for copper has been stable domestically for the last month or so. Furthermore, he says spreads on copper have narrowed or remained consistent in light of the recent decrease in Comex pricing.

Meanwhile in the stainless steel scrap market, one U.S.-based trader says demand from domestic consumers has been low yet steady.

Other than a small market uptick caused by an August lockout at one of the four major U.S. stainless mills, markets have been unimpressive, he says. “What they need, they’ve been able to buy, and they so far have requested metal monthly,” the trader says.

Declining prices for scrap have been evident in the stainless steel scrap market, too, related in part to “a massive drop in the [LME] price of nickel” that occurred between May and August.