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Profit squeeze

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U.S. aluminum scrap exports, which are not included in the government’s consumption statistics, totaled 585 million pounds year to date, down 10.6 percent from 2013.

Recycling Today Staff May 28, 2014

The snow may be gone, but the challenging environment many nonferrous scrap dealers experienced during the first quarter of 2014 continues. After a modest increase in pricing in April, some nonferrous metals, including aluminum, appear to have settled into a trading range that trends toward the negative.

After topping out at slightly more than $1,800 in April, prices for secondary aluminum have drifted downward somewhat since.

“We are still in a rough patch,” an aluminum broker on the East Coast says. “There is just no momentum either way,” he points out. A scrap dealer in the Southwest says few processors have been able to turn a profit because of the slow generation and narrow spreads. He adds that generation is off by 25 to 40 percent, according to other processors he’s spoken with.

Another source points to the lack of substantive upward improvement in the residential and commercial construction sectors. While preliminary indications point to modest improvements in new construction starts, he says he feels these improvements do not demonstrate a true recovery. “We are just bumping along without any direction,” he adds.

Also challenging aluminum scrap dealers, according to another source, is Aleris’ recent purchase of Nichols Aluminum, reducing the number of domestic buyers.

According to the U.S. Geological Survey (USGS), the U.S. aluminum industry purchased an estimated 714 million pounds of aluminum scrap during February 2014, a 0.8 percent decline relative to the same time last year.

During the first two months of 2014, preliminary data from the USGS indicate that the recovery of aluminum from scrap totaled an estimated 1,246 million pounds, a decline of 1.8 percent from the 2013 year-to-date total of 1,269 million.

U.S. aluminum scrap exports, which are not included in the government’s consumption statistics, totaled 585 million pounds year to date, down 10.6 percent from 2013.


Copper markets also are having their share of difficulty. The Chinese government continues to take steps to improve the economy of the country, which is the largest consumer of copper scrap. Despite these moves, demand for copper continues to slip, with prices toward mid-May falling to the $3-per-pound range.

Like aluminum, copper scrap appears to be tough to come by. Several dealers say they have to work harder to get material.

However, with Chinese consumers having backed off of new orders, consumers in North America can get enough material to meet their needs without prices escalating.

Stainless steel markets continue to be driven by economic and political issues. It looks like Indonesia’s ban on commodities exports, including those of nickel, will continue for the foreseeable future. Nickel prices have been climbing as a result, reaching a 15-month high as of mid-May. Adding to these concerns are possible sanctions on Russia, which could affect Norilsk Nickel, one of the world’s largest nickel mines.

With concern over nickel supply growing, consumers are chasing stainless steel scrap, which has led to a fairly robust market for the metal.


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