The near-term outlook for nonferrous metals is not upbeat. Many scrap metal recyclers say they are writing off the rest of 2012 in anticipation of a potential modest improvement by the end of 2013’s first quarter.
The sluggish global economy appears to be the biggest impediment to a sustained recovery in nonferrous scrap markets. Concerns about China’s economic health add to the slow economic recovery of the United States and the monetary problems many countries in the euro zone are experiencing. While China’s economy is still growing, it has done so at a slower rate recently. Recent indicators show mid-single-digit growth compared with double-digit growth the country enjoyed throughout the past several years.
In Chicago in mid-September, speakers and attendees of the Institute of Scrap Recycling Industries Inc. (ISRI) 2012 Commodities Roundtable Forum discussed the challenging short-term outlook for nonferrous scrap, though many found the long-term prospects for these metals more favorable.
One source who has operations in the United States and China says exports, especially to China, have slowed quite a bit. She notes that China has raised the import duty on nonferrous scrap shipments, which has further weakened the flow of copper scrap to that country. Prices for insulated wire have increased so much that exports of this material to China will be negatively affected.
Even more problematic for some scrap metal exporters has been China’s tightening of specifications for scrap shipments. “It is now virtually impossible to ship mixed commodities in to China,” another exporter says.
As a result of the situation in China, some U.S. recyclers say they are having an easier time obtaining wire for processing.
Despite the improvements in the availability of copper wire, many scrap metal dealers report that the flow of scrap into their yards is 15 to 30 percent less than usual for this time of year. The decline in manufacturing continues to be a major reason for the drop in industrial scrap availability. However, several dealers say that some peddlers and smaller scrap yards are holding onto scrap in anticipation of higher prices.
After steady price declines through most of the summer, copper prices increased at the start of September, as various nations were close to implementing some form of stimulus designed to boost their national economies.
Aluminum markets also have lost some luster, with an East Coast exporter saying they are “not where they were a few months ago.” Aluminum producers continue to cut capacity in an attempt to bring supply and demand into balance.
While the short-term outlook is bearish, market observers are more optimistic in the longer term. Jason Schenker of Prestige Economics, Austin, Texas, who spoke at the ISRI Commodities Roundtable Forum, said he felt quantitative easing would help strengthen many global economies. Schenker forecasted that the U.S. economy would grow at 2.3 percent in 2012 and the European Union would swing from a decline in 2012 to a modest improvement in 2013.
(More information on nonferrous metal markets, including consuming industry reports and breaking news, is available at www.RecyclingToday.com.)