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Finding a Floor

Market Reports - Nonferrous

RTGE Staff January 18, 2013

The European economy does not look very pretty at the present. High debt has saddled much of Western Europe, contributing to a fairly dim outlook for 2013. The continuing fiscal problems, especially throughout southern Europe, are creating a sizable drag much of the Western European economy. Therefore, demand for nonferrous metals from most regions on the continent is expected to be somewhat muted through the first half of 2013 at least, though pricing may be finding the floor.

While the short-term economic outlook continues to be murky, looking out further, bright spots are visible for some nonferrous metals. Copper and aluminium scrap markets have seen positive developments, though stainless steel continues to be one of the more challenging nonferrous metals.

While copper and aluminium may hold promise, most analysts say they expect to see continued price volatility.

Copper scrap concluded 2012 on a somewhat positive note. After slumping during the middle half of the year, interest in copper scrap, especially from buyers for Chinese consumers, increased at the end of 2012. These buyers were interested in adding to their inventories, which has contributed to firming the movement and price of copper scrap throughout Western Europe.

Expectations that China’s incoming government may kick off significant infrastructure investment projects is giving copper scrap generators hope that stronger orders from China will follow.

While China remains the linchpin for the improvements in the copper scrap market, European buyers continue to be faced with sluggish demand from their domestic consuming customers.

Reflecting the moderately upbeat copper news, the German copper producer and copper scrap recycler Aurubis reports an increase in sales for 2012 and expresses a more bullish outlook for 2013. According to a statement released by the company in late 2012, “The Aurubis Group held its ground in a difficult environment that was largely influenced by economic uncertainties and generated a very satisfactory result. The good result was supported first and foremost by higher concentrate treatment charges and higher throughputs of recycling materials in operating business.”

Regarding copper scrap, the company notes that its availability has improved through 2012, which has led to higher utilization rates for the group’s recycling capacities.
 


Aurubis adds that its Kayser Recycling System (KRS) facility in Lünen, Germany, which can process scrap material with low copper and precious metals content and complex materials such as electronic scrap, increased its throughput by 5% compared with 2011’s figures. The company attributes this growth to its commissioning of the new “KRS-Plus” system in summer 2011.

In general, Aurubis notes that the copper scrap market was good during its 2011/2012 fiscal year. “The exchange prices for copper supported the good supply during almost the whole period. Only at the beginning of 2012 did lower prices temporarily reduce the copper scrap supply,” Aurubis states.

Going further, Aurubis notes that copper scrap demand from China, the largest international consumer, was at a moderate level during the company’s entire fiscal year of 2011/2012.

“Overall, the positive market situation for copper scrap led to high utilization of the Aurubis Group’s existing recycling capacities,” the company states.

Aluminium markets also may have found a base, though optimism for the metal is more muted than for copper. Aluminium scrap prices began trending upward toward the end of 2012, and bullishness is creeping into the market. General demand for the metal has seen an uptick, though several sources say they feel this growth is being driven by supply constraints rather than an actual increase in demand for the metal.

Looking out further, the aluminium packaging firm Novelis recently broke ground on a large aluminium recycling and casting center at its Nachterstedt, Germany, plant. When complete, the company says it will be able to produce 400,000 metric tons of aluminium sheet ingot from recycled material at the new facility. Upon its completion, Novelis says the facility will be the largest aluminium recycling center in the world.

The center will process used beverage cans (UBCs) as well as other types of aluminium scrap from across continental Europe.

According to Damstahl, a German stainless steel service center, stainless steel markets are still in the midst of an overall economic slowdown. A report from the company says the market for stainless steel does not show signs of improvement. In fact, nickel prices declined during the last quarter of 2012, though the firm says it feels that the metal has reached a floor.

Heading into 2013, Damstahl says the stainless steel market likely will not show volume growth over the longer term.

Despite the downbeat assessment of early 2013, Damstahl says it expects demand from end users to improve as the year continues. Driving the improvement in the stainless market likely will be the oil and gas sector, which is expected to show double-digit growth in Europe in 2013.

As for stainless steel, the overcapacity of finished metal on the market likely will continue into the future. Despite ThyssenKrupp selling its stainless steel operations to Outokumpu, a European metals producer, additional positive developments are not apparent in the mill sector.

While ThyssenKrupp has sold its stainless steel operations, Outokumpu still needs to sell its Terni, Italy, stainless steel mill. Stainless steel markets likely will remain in a state of flux until this sale has been completed.


 

The recycled lead market was challenged by a raid that was carried out by authorities with the European Commission (EC) over alleged collusion taking place among the largest lead recyclers in Europe. The raid, which occured in the fall of 2012, resulted in unannounced inspections at the premises of several purchasers of scrap batteries and other lead scrap for the production of lead.

According to a statement issued by the EC, it has reasons to believe that the companies concerned may have violated Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits cartels and restrictive business practices.

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