A So-So Market

Departments - Nonferrous

January 7, 2013
Recycling Today Staff

Copper, aluminum, nickel, zinc and lead prices each have shown resiliency, with prices moving to the upside at the end of November. “We have seen quite a rally (in prices) in nonferrous metals,” a scrap metal dealer based in the Midwest says.

An East Coast broker says copper, aluminum and nickel prices are up significantly from where they were earlier in 2012.

Although prices have improved, optimism is muted. Several scrap dealers say industrial generation is still down and volumes are off from early 2012.

Another Midwestern scrap metal recycler predicts nonferrous scrap metal markets will continue to “muddle” along before seeing a sizable improvement by the second quarter of 2013.

The improvement in pricing follows several months of sluggishness, with prices trending downward. Several recyclers say markets lacked enthusiasm during the summer and much of the fall in anticipation of the presidential election, which was a reason for uncertainty.

A scrap dealer based in the eastern U.S. says he sees markets for copper scrap improving toward the end of 2012. Part of his optimism stems from what he describes as a more stable trading environment. He says copper prices are now moving within a more tradable range of $3.50 per pound. “Stable COMEX (Chicago Mercantile Exchange) prices have helped.”

The scrap dealer says he has a bullish outlook regarding copper scrap markets in the first quarter of 2013. “November has been a great month for us,” he says. “Consumers are coming back, and the flow of material has been solid. It is a very positive market right now.”

The automotive sector continues to be a source of hope for aluminum producers and the scrap dealers who supply them. Earlier in 2012 some skeptics said they felt the automotive market would be dragged down by the overall malaise in the U.S. economy, but more recently scrap dealers say this sector has held up well, leading to a steady flow of aluminum.

The housing sector, which has long troubled aluminum markets, also is showing modest signs of improvement. While far from robust, the recent uptick in new housing starts has translated into a modest increase in orders from aluminum smelters selling into the housing sector.

Despite the modest improvement in prices, several aluminum scrap handlers are hedging their bets in regard to the near-term market. “Business is slow and spotty with customers,” one East Coast broker says. “Buyers are coming in at opportune times, with their eyes toward making sure inventories are low at the end of the year.”

As for generation, the East Coast broker describes it as inconsistent.

A nonferrous exporter operating on the East Coast says copper scrap inventories are down considerably in China, according to his sources in the country. “The message is that they need metal. Business in China is improving, and a new government is coming in.”

He adds that stimulus packages enacted by the incoming government should boost infrastructure spending, which should result in better demand for scrap metal.

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