Copper, aluminum, nickel, zinc and lead prices each have shown resiliency, with prices largely showing forward momentum through the end of 2012. “We have seen quite a rally (in prices) in nonferrous grades,” a scrap metal dealer based in the Midwest says.
An East Coast broker adds that copper, aluminum and nickel prices are up significantly from where they were one year ago.
Although prices have improved, optimism is muted. Several scrap dealers say industrial generation is still down and that volumes are off from early 2012.
Another Midwestern scrap metal recycler predicts that nonferrous scrap metal prices will “muddle” along before seeing a sizable improvement by the second quarter of 2013.
The improvement in pricing follows several months of sluggishness in early 2012, when prices trended toward the downside.
A scrap dealer based in the eastern United States says he sees markets for copper scrap improving. 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 level. “Stable COMEX (Chicago Mercantile Exchange) prices have helped,” he adds.
This stability has given scrap suppliers the chance to sell their products steadily, rather than wait for a sharp price swing to spur buying.
The scrap dealer says he has a bullish outlook toward copper scrap markets during 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.”
He acknowledges that some traders are holding onto their copper, waiting for higher prices; though it appears these speculators are fewer in number than seen earlier this summer.
Despite the strength in nonferrous metals prices, demand from refiners is still less than robust, sources say. One scrap metal recycler says he received a sizable order of copper from a customer, but has yet to supply most of the material because of the lack of orders for finished product. “Ultimately, it rests on our customers selling product,” he says of his ability to move material.
However, he adds that a sizable turnaround appears close at hand. “Some of these customers we supply need just a few more orders to significantly boost their schedules,” the dealer says.
Another recycler based in the Midwest says that while overall production and scrap volumes are down, the utility and wire businesses are both in good shape. He expects these sectors to be fairly healthy for a few more months.
A number of recyclers say many domestic consumers had been reluctant to carry a large scrap inventory at the end of the year. Some of those orders are anticipated to arrive early in 2013.
Regarding aluminum, the automotive sector continues to be a source of hope. While earlier in 2012 some skeptics said they felt the automotive market would be dragged down by the overall malaise in the U.S. economy, more recently scrap dealers say this sector has held up well, which has led to a steady flow of aluminum scrap.
A large handler of aluminum scrap on the East Coast says more scrap dealers are “feeling the urge to sell.” He adds that there is “plenty of metal out there for them to meet their needs.”
The housing sector, which has long troubled aluminum markets, also is showing modest signs of an 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.
One of the most optimistic sources is a large nonferrous exporter operating on the East Coast. He says his representatives in China say copper scrap inventories are down considerably. “The message is that they need metal. Business in China is improving and a new [central committee] is now in place.”
He adds that stimulus packages enacted by the incoming government in China should boost infrastructure spending, which should result in better demand for scrap metal. While he says he expects an improvement in nonferrous metals markets, he says it like will occur after Chinese New Year in mid-February.
Seated L to R: Timothy O’Brien Jr., mayor, City of New Britain; Art Ward, mayor, City of Bristol; Stephen Diaz, vice president, NE Region Business Manager, Covanta Energy; Thomas Dunn, mayor Town of Wolcott; Robert Lee, town manager, Town of Plainville.
Second row L to R: Cheryl Thibeault, business manager, Covanta Energy; Mark Bobman, executive director, BRRFOC; Theodore Shafer, first selectman, Town of Burlington; Sheila Tralins, vice president, deputy general counsel, Covanta Energy; Mary Ruder, NE Region Admin Assistant, Covanta Energy; Carol Skultety, Plainville town clerk.
Back row L to R: Robert Michalik, BFFFOC general counsel; Robert Chatfield, mayor, Town of Prospect; Theodore Scheidel, administrative assistant, Town of Plymouth; Garry Brumback, town manager, Town of Southington; Vincent Festa Jr., mayor, Town of Plymouth; Wade Cole, first selectman, Town of Hartland; Mark Lyon, first selectman, Town of Washington; Jack Travers, first selectman, Town of Warren; Anthony DaRos, first selectman, Town of Branford; Denise McNair, town manager, Town of Berlin; Joe Vitale, business manager, Covanta Energy Bristol; John Bruni, account executive, Covanta 4Recovery; Alan Lieberman, Shipman and Goodwin LLC.
Ferrous scrap recyclers in North America continued to operate in a “steady as she goes” market as the new calendar year started. Domestic mill demand is not booming but is in step with the lagging pace of supply. Export demand has remained consistent, with Turkish mills placing orders on the Atlantic Coast and South Korean buyers being cited as a steady presence by recyclers on the Pacific Coast.
Scrap generation offers a few bright spots, depending on the grade and region, although the construction and demolition sectors remain among the most beleaguered segments of the economy.
America’s oil and natural gas booms are keeping scrap orders strong at pipe foundries and tube mills and generation steady in oil fields. While traditional oil-producing states like Texas and Oklahoma are home to new drill sites and are pumping out steady volumes of crude oil, North Dakota has emerged as the second-largest oil producer in the lower 48, behind only Texas.
Statistics from the U.S. Energy Information Administration show North Dakota has grown from producing 39.9 million barrels of oil in 2006 to 153 million in 2011, marking a 283 percent increase in production.
The state’s 2 percent unemployment rate is owed largely to this oil boom, which is credited to new extraction and recovery techniques and a floor price for petroleum that gave energy companies the confidence to invest there. The result in North Dakota has been not only the generation of oil field scrap but also one of the few booming housing and construction markets yielding healthy quantities of scrap.
Construction activity in most other states, however, remains in a mode of very slow recovery from the trough years of 2008 and 2009. Tepid optimism might best describe the construction employment forecast for the Associated General Contractors (AGC) industry trade group for 2013.
In an annual forecast released in mid-January, the group says, “Significantly more construction firms are planning to add new staff than plan to cut staff, while demand for many types of private sector construction projects should increase this year, according to survey results.”
The AGC titled the report accompanying its survey results Tentative Signs of a Recovery: The 2013 Construction Industry Hiring and Business Outlook.
“While the outlook for the construction industry appears to be heading in the right direction for 2013, many firms are still grappling with significant economic headwinds,” says Stephen Sandherr, the association’s CEO. “With luck and a lot of work, the hard-hit construction industry should be larger, healthier, more technologically savvy and more profitable by the end of 2013 than it is today.”
Contractors appear increasingly optimistic that demand for certain private sector projects will expand this year, according to Sandherr. Firms are most optimistic about the outlook for hospital and higher education construction, he adds. Contractors also signaled optimism about the markets for power construction. On the other hand, they had lower expectations for manufacturing; private office and retail, warehouse and hotel construction.
Contractors also anticipate that demand for many types of public construction will decline in 2013. “A significant – but smaller than last year – number of contractors report that customers’ projects have been delayed or cancelled because of tight credit conditions,” the AGC report summary also states, noting that 40 percent of responding firms report that tighter lending conditions have forced their customers to delay or cancel construction projects.
“Unfortunately, there are almost as many causes for concern as there are signs of optimism,” says Ken Simonson, the association's chief economist.
One scrap broker contacted says he sees little reason for his company to budget for increased ferrous scrap flows in 2013. He cited increased shredder competition and the lukewarm construction market as the main reasons.
For shredder operators, the automotive market offers better news, with R.L. Polk & Co. forecasting between 15.3 and 15.4 million new vehicle registrations in the United States in 2013. That is an improvement over the 14.4 million new vehicles registered in 2012.
A January write-up in the Wall Street Journal indicates that “barring a slowdown in the U.S. economy, new vehicle sales are expected to surpass the 16 million mark in 2014. The last time the U.S. auto industry sold 16 million vehicles was in 2007.”
On the demand side, domestic steel production increased slightly in the week ending Jan. 12, 2013, compared to the week before, according to the American Iron & Steel Institute (AISI). The 1.82 million tons produced was up 3.6 percent from the previous week ending Jan. 5, 2013 when production was 1.76 million tons
Domestic mills are operating at a capacity utilization rate of 75.9 percent, according to AISI, which is down from the 77.6 percent rate at which they were operating in the second week of January 2012.
- Two dozen types of scrap imports banned by China in 2018
- Itronics ships silver-copper bearing glass produced by its e-scrap refining
- China asks to ban mixed paper and many plastic scrap grades
- Rubicon Global launches RubiconPro with Goodyear Tire discounts
- Dow Packaging and Specialty Plastics collaborates to make trash bags from recycled plastic scrap