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A Lack of Enthusiasm

Departments - Nonferrous, Nonferrous

Scrap generation from the industrial and post-consumer sectors remains challenging, and markets for some nonferrous metals appear to lack enthusiasm.

Recycling Today Staff November 1, 2012

Scrap generation from the industrial and post-consumer sectors remains challenging, and markets for some nonferrous metals appear to lack enthusiasm.

Several Midwestern scrap processors say that despite the general malaise, copper and aluminum prices have experienced a strong surge. “Copper and aluminum are both pretty strong right now,” says one Ohio scrap dealer. Part of the reason, he speculates, is that there isn’t enough material flowing into scrap yards, which is creating shortages.

Despite price volatility, a number of scrap dealers say peddlers and smaller generators are holding onto their copper scrap in anticipation of higher prices.

An East Coast broker says generators also appear to be holding onto their aluminum scrap, even with a fairly healthy uptick in aluminum prices. “They think prices could go further,” he says, adding that it could be a risky strategy, as there is no underlying reason for the strength in aluminum markets.

While some of the malaise may be related to the sharp drop in ferrous scrap prices seen in October, scrap dealers say it has more to do with lagging generation.

A large scrap metal recycler based in the South says that while prices for aluminum and copper scrap have improved moderately, markets are slow overall. And although generation has declined relative to last year, he says the amount of material coming across the company’s scale has increased moderately recently.

China, the largest consumer of copper scrap in the world, had been pulling back on its orders until recently. A scrap metal executive says this recent jump in shipments could be in response to concerns about a potential strike by dockworkers on the East and West coasts. A strike of any length could have a major effect on the movement of offshore orders.

According to a recent article in the Wall Street Journal, commodities such as aluminum, zinc, nickel and steel are in oversupply in China, which could lead to softening prices through the rest of 2012. The country uses more than 40 percent of the world’s base metals, according to the Wall Street Journal. Without China, world demand for base metals would have fallen 2.6 percent instead of rising 2.3 percent in the second quarter of 2012.

The upswing in stainless steel demand typically seen during the second half of the year has failed to occur, according to the U.K. consulting firm Meps. “In most years, distributors and end users allow their inventories to run low during the summer holiday period, then rebuild stocks in early autumn,” according to Meps. “On this occasion, though, there has been little or no pickup in activity.”

Despite the flatness in stainless steel, the nickel market holds promise, according to Meps. The London Metal Exchange cash nickel price increased by more than $2,400 per metric ton in September.

With the upcoming presidential election, many scrap metal recyclers say everyone from manufactures on down are holding off on expansions until there is more clarity in the market.


(More information on nonferrous metal markets, including consuming industry reports and breaking news, is available at www.RecyclingToday.com.)

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