Additional difficulties for recyclers of various nonferrous metals have been evident in recent weeks as London Metal Exchange (LME) prices for copper, nickel and aluminum alloy fell further in early November. Meanwhile, conversations with U.S.-based nonferrous scrap processors indicate that market conditions remain difficult.
A processor based in the U.S. Southeast says copper scrap has been under pressure all year. “Much of the industrial accounts’ sales are based on the sales mix and value they can receive for their scrap. What we have seen is a lot of the large accounts have put their sales to us on hold.”
The processor says it does not appear that these accounts are selling the copper elsewhere.
“They don’t like these prices,” he says.
“We are really looking forward to the beginning of 2016, when these large industrial accounts will look to begin shipping their scrap inventory or will review pricing in anticipation of starting shipments again,” the processor says.
When it comes to aluminum scrap, the processor says today’s market conditions require a focus on processing costs down to the penny. “Clearly you can lose all of your profit if you’re not estimating your processing costs correctly,” he says.
“The old-school mentality was ‘you win some, you lose some,’ and the margins were wide enough that at least you still made something. That’s not the case today. It is so competitive right now, and people are just fighting to survive,” the processor says.
However, domestic markets for some aluminum scrap grades may be seeing renewed strength. The processor says over the last several months, the markets have moved from domestic to export and most recently back to domestic.
Along with this cycle, the processor also describes an increase in domestic demand for shredded or baled cast material. “It’s still strong from the automotive side based on the offers we’re seeing,” he says.
When it comes to stainless steel scrap, at least one dealer in the market says the segment is being affected by a surplus of primary nickel.
“There’s too much supply and not enough demand,” says Alastair Gledhill, a product manager with Pittsburgh-based ELG, a wholesaler and processor of stainless steel scrap.
Gledhill says of the top 20 nickel mining companies, only a few can produce and sell their product at a cost that remains profitable at today’s LME level.
“How sustainable is it for these nickel miners to continue to be pulling metal out of the ground?” he asks. “They’re losing money on every pound.”
Considering the competitive nickel units available to produce stainless steel—ferronickel, primary nickel, nickel pig iron and scrap—stainless producers have plenty of choices, Gledhill says.
“They’re all fighting for space in the same melting pots,” he explains, adding that the shortage of buyers also is pulling scrap prices down.
What’s more, Gledhill says he doesn’t expect to see much improvement in demand in the near future, adding that scrap markets have suffered decreasing margins. “That’s just a reflection of having to keep scrap competitively priced against all the alternatives,” he says.
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