Nonferrous Scrap

Western Europe/Italy - Fernando Duranti, Leghe & Metalli
Netherlands - Johan van Peperzeel
Russia - Ildar Neverov, Scrap Market Ltd.
Italy - Dr. Sandro Giuliani, Giuliani Metalli SRL
China - Eric Deng, Ling Tong Metal
China - TopRecycle

NONFERROUS SCRAP>> WESTERN EUROPE, ITALY >> Fernando Duranti, Leghe & Metalli 

In the nonferrous markets, activity hasn’t been that great. People started working again around Jan. 8. They did not start actually working, but they reopened their offices around that day. By the time they stood on their balcony looking how much brass and copper scrap they had, it took them awhile to get going. Everything has been going very slow.

 

The ingot makers are desperate for scrap. There is very little scrap, first of all. But the scrap is scarce, not because it’s not available. It is available, but the export prices are much higher than what the domestic consumers want to pay today or have been willing to pay over the last 10 to 15 days. With copper going up nearly on a daily basis, the Italian domestic consumers cannot keep up their prices on the same level as the export level prices.

 

The export market changes its prices on an hourly basis according to the value of the exchange rate and the value of the copper on the LME. Consequently there has been a lot of exporting during this period. A lot of the consumers are buying scrap. On the other hand, the semi-products manufacturers are preferring to buy rod brass swarf (metal shavings and chippings) rather than buying scrap because the price of the scrap is likely higher than the rod brass swarf scrap. They also prefer swarf rather than the scrap because there is more swarf available. It doesn’t go for export, as there is hardly any export demand for swarf. But there is demand for brass scrap. It is cheaper to buy swarf and it is always cleaner and it’s a regular alloy.

 

Export prices for brass scrap have been fairly high. However, during the last two or three days in mid-January, I believe prices of brass scrap have weakened down by between $250 and $280 per ton. That is caused in part by the strengthening American dollar and the weakening of the LME. It is a combination of both. But the problem is that the Chinese don’t relate the strengthening of the U.S. dollar compared with the price on the LME. They say that if the price on the LME goes down, they have to reduce their price.

 

They don’t realize, or they don’t want to realize, that the price in euros keeps on going up and we have to pay more euros to buy brass when the dollar gets stronger and the euro gets weaker. Some discussions arise in negotiations because of this problem. Sometimes the Chinese don’t get as much material as they want because of this factor.

 

On the whole, I think the general situation in the brass market is slow. Consumers are still working at between 50% and 60% of capacity, so it’s very difficult to say whether it is going to pick up again. It looks as if economic conditions are improving and they have actually domestically. Business for other products has improved a lot. The industry has picked up in Italy and the country has risen from what was a bad moment. But on the brass side I think it is still a bit difficult and slow.

 

On the steel side, there have been a lot of improvements and the situation looks a bit better. The price of steel scrap has gone up and demand is there. Production on the steel side is well above 60%. Things seem to be improving.

 

It looks as if 2010 will be a relatively satisfactory year, not as much as 2008, but there is going to be a bit of improvement over 2009.

 

Zinc was in demand but now it has cooled down a bit. I would say that people bought a lot of zinc toward the end of 2009 because they wanted start the year with high stocks of inventory. Now they are using those and will probably start buying again near the end of January.

 

Aluminium is doing quite well because the automobile industry is going quite well. Italian sales were up 14% for December 2009.

 

Titanium availability, all of a sudden, has crept very, very low. Scrap has completely disappeared. A lot of people are keeping high stocks of titanium, specifically turnings. Those turnings normally go for titanium production. These have disappeared because there has been a pick-up in the titanium price. People imagined that there was going to be a gradual increase on the ferrotitanium price and this is exactly what happened. The price has gone up to over $5 per kilogram and it is getting closer to $6 per kilogram. Now with this lack of scrap and turnings people expect the price of ferrotitanium to move up toward $10 per kilogram.

 

Apart from that, I think that titanium is also sought for because there is a big demand for titanium scrap recently. There has been a rush in the industry to everyone that sells titanium over the past week or so.

 

Most of the titanium scrap comes out of the aircraft industry in Italy. They produce parts for Airbus, and consequently understand that Airbus is doing very well for the moment.

 

Aluminium is probably, I won’t say doing well, but it is doing a lot better in respect to brass and copper. Copper itself is doing well, but the brasses are on a very slow course.

 

Fernando Duranti can be contacted at fernandoduranti@leghemetalli.it.

 

 

NONFERROUS  SCRAP>>NETHERLANDS  >> Johan van Peperzeel

 

First of all, this time I want to start with the zinc market. The zinc and lead markets are more or less facing the same struggle for the moment. The information I have is that if you look at one month ago, let’s say the end of 2009, everyone was positive about the zinc market for 2010. But now we are one month further and at the end of January, there is a new situation, with zinc especially. Due to the hedge funds, the market was positive last year.

 

But now, the credit facilities of the Chinese Bank have reduced the credit availability to all the companies. This means that the growth of the economy was too quick and now the economy is growing at a normal level, around 8% or 9%, but not above 12%, which is what it was during the last quarter of 2009. So the Chinese Bank has reduced all kinds of credit availability and therefore, buying is more difficult.

 

When you look at China itself, it has 1.3 million tons of zinc ingots in warehouses. This is really something. They want to slow the growth and that is the main cause of the LME price for zinc being reduced €200 to €250 per ton. More or less, we think it will, for the first part of this year, remain at this level. It could be a little bit more reduced due to the expectation that the hedge funds will go in and sell their volume of zinc to put the money in other markets. If they do it in a slow way, let’s say equal tonnage per month, then the LME will remain at the same level. But if they drop their volumes at once on the market then there will be a demand disruption on the LME for zinc, more than we are already facing today. The second part of this year should be better and could be slightly increased back to 2008 price levels.

 

For instance, if you look at India regarding zinc markets, the small traders have huge problems with zinc markets in India because there is an internal set price in India itself. Due to the fact that the internal price is relatively high, the small traders have huge problems. Some of them are already in bankruptcy. Because in Europe, especially in the Netherlands, we are an exporting country, we have problems exporting zinc at the moment to India, due to the internal struggle within India regarding the zinc. We are highly dependent on the traders who are buying the material from Europe.

 

The second part of this year should be better for zinc and prices could be slightly increased back to 2008 price levels.

 

Zinc is not the only market being affected by the speculators, as aluminium is also. The expectation with aluminium is that there will also be a slight dip in February and March. For the whole of 2010, people are more positive about aluminium markets. Let’s say today the price level and the demand for material is not that high, but the expectation is that before the end of the year, these will be at a normal economic level. Again, it is the hedge funds that are strongly involved in the situation. It’s not stable at this level.

 

With lead, the global idea is that speculation is also high, similar to zinc. Lead demand, especially in Europe, has been affected by the closing of several European battery producing plants, so there is less demand from the battery producers. Therefore, all the lead recyclers are looking for other sales and this leads to a domestic fight on the market regarding selling ingots. With, the secondary lead ingots, normally you have a premium on these, just as with aluminium and zinc ingots. But the premium on lead ingots dropped drastically and you could even buy ingots without a premium from plants just to get rid of their production.

 

My main shareholder and secondary lead producer in France sold a lot of lead ingots also to other markets, not only to the battery manufacturing world, but also to other lead users, such as producers of ballast.

 

If you look at 2007, each secondary lead producer or primary lead producer could ask any premium because there was so much demand and not that much available. This has completely turned now. There is, for Europe, too much lead and not enough demand. In Asia, in China for instance, they have closed plants due to lead pollution of the children. Russian plants have closed.

 

In India there is still some demand and what you see is all kinds of people from Europe and America are traveling all around the world to get their ingots sold. It is a complete opposite situation to what we had two years ago.

 

In summary, during the first part of 2010, there will be a correction of the LME [price] due to the hedge funds that are going to sell their stocks. But for the whole of 2010, we are slightly positive, more than we were about 2009.

 

Johan van Peperzeel can be contacted at jh@peperzeel.nl.

 

 

NONFERROUS SCRAP>>RUSSIA>> Ildar Neverov, Scrap Market Ltd.

 

With nonferrous metals, we can see export appearing on the market again in January, not the export of scrap, but of semi-finished products. The scrap, mainly copper, is being remelted into semi-finished products like slabs, ingots or bars and is being exported to Germany. It has been a quite profitable business up until now and our customers like it.

 

The re-melted scrap doesn’t have any specification. For example, let’s consider wire. They re-melt it and it becomes some alloy or just scrap re-melted, there are no additives. Everything goes smoothly because it will go through customs and everybody is happy.

 

There is a 5% duty on export of semi-finished products, but in comparison, there is a 50% duty on scrap. That’s a big difference. It is the first good sign of material going out, because before we didn’t export anything.

 

For the aluminium industry, it is quite strong here. Aluminium has survived and is paying good prices for scrap.

 

Aluminium is staying domestic as well as lead and zinc. So everything is staying here because the market seems to be quite strong for this material.

 

We have had quite bad weather here, especially in St. Petersburg. However, I don’t see any decrease in scrap availability. That seems to be fine. Scrap dealers find it, some of them have a lot of stock, and they send it all over the country.

 

For the stainless steel market, it is about 95% export-oriented. We do some domestic sales to South Russia but most of it certainly goes for export. 

 

Right now everyone is paying their bills and we can see a healthy industry.

 

Ildar Neverov can be contacted at siberiametals@bk.ru.

 

 

STAINLESS STEEL>>ITALY>> Dr. Sandro Giuliani, Giuliani Metalli SRL

 

As of late January, the stainless steel scrap market is characterised by a scrap shortage in Italy, as is the case all over Europe.

 

The manufacturing industry has not been working at full capacity and, therefore, has produced small scrap quantities. Demolition projects are extremely limited as well.

 

The steelworks’ demand is not exceptional, but it is still exceeding the scrap offers. The demand for 316 grade is good in Italy, just as it is in the rest of Europe. All quantities of 316 that are made available are absorbed by the market.

 

Despite this situation, it is not easy to achieve significant price increases. In addition to the difficulties related to LME nickel fluctuations, there are more difficulties to consider within the stainless steel industry.

 

The nickel increase on the LME is more related to speculative choices concerning all commodities than to the fundamentals based on the specific demand/offer ratio for this metal.

 

During this period, not even the prices coming from Asia are provoking interest. This means that small quantities of material are leaving for Asia, from Italian ports, and the rest of Europe is experiencing a similar situation.

 

On the contrary, some scrap is currently being imported from Korea, which is evidence of an anomalous and probably temporary situation.

 

Dr. Sandro Giuliani can be contacted at mail@giulianimetalli.com.

 

 

NONFERROUS SCRAP>>CHINA>> Eric Deng, Ling Tong Metal, www.LingTongMetal.com  

 

Right now, the commodity market, including copper, is being tested continually by the government’s moves in early January. On Jan. 7, China's central bank surprised markets by raising the interest rate four basic points on its three-month bills, further tightening its grip on liquidity. Five days later, on Jan. 12, copper prices at home and abroad dropped sharply again after China's central bank announced unexpectedly it would raise its bank reserve requirements one half of 1% to cool the growth. However, the copper price has recovered somewhat under the support from a softer dollar, rallying stocks and increasing fund buying from lows.

 

Despite fluctuating copper futures, local spot copper market fundamentals are not too bad, according to market research. Buying in the market remains relatively brisk in early January as many consumers are stockpiling for the Spring Festival holiday ahead. It appears the copper scrap price may continue to trend up in January on increasing buying.

 

Although many copper scrap traders are reluctant to make concessions on price, the raw material price doesn’t rise sharply. The persistence of copper traders is reasonable. For one, local copper scrap market remains in short supply now. For another, most scrap dealers are quite optimistic for the copper scrap market in first quarter of 2010 as global economies recover.

 

In summary, the copper price may fluctuate in a wide range over the short term due to the government’s policy.

 

While the Copper price in China continues to rise sharply after the New Year’s Day holiday, the local brass strip market remains relatively quiet, according to market research. Insiders say there are three reasons for the muted market response.

 

First of all, copper price have risen too fast and to a much higher level than expected. According to our data, with rising copper prices, the local brass strip price has been 4,400 yuan per ton higher from that on Dec. 18, 2009. The huge price increase can hardly be accepted by most brass strip consumers and traders.

 

Secondly, with surging copper, many hardware commodities producers and terminals producers, such as two large brass strip consumers, have sharply raised their product prices to guarantee profits. But most of their customers prefer a wait-and-see attitude and are reluctant to place orders at such high prices.

 

Finally, many the brass scrap traders are sticking persistently to the bidding prices on the prospect of improving demand ahead, which has dragged trades in the market down even further. According to insiders, one reason brass scrap dealers are persistent is because market supplies are quite limited now. Additionally, they stockpile materials with the thought that copper prices may continue to trend upward.

 

Right now, domestic transportation is being disrupted by heavy snowfall in northern China. Many provinces have started to limit electricity use to fight against the tight coal supply. The power operator in Henan province, for example, has warned local aluminium smelters that its power supplies may fall due to local power shortages, officials said on Jan. 11. China’s Henan province accounts for a fifth of aluminium capacity in the world.

 

The present situation is very similar to that in January 2008. During that period, aluminium contracts posted on Shanghai Futures Exchange (SHFE) began to rise sharply supported by the severe snowstorm. The price jumped to a level of 21,300 yuan per ton on March 7, 2009, up 3,000 yuan per ton from the Jan. 2 price. The aluminium price this year may be very likely to repeat that trend.

 

The aluminium price is also being supported by rising costs. Aluminium Corp of China Ltd (Chalco) raised its alumina spot price by to 3,000 yuan per ton from Jan. 8, according to its Web site. Dictated by the price, the cost of aluminium products will rise by about 400 yuan per ton accordingly.

 

The Chinese government’s credit-tightening moves reflect concerns over a possible rise in inflation this year as the economy continues to recover from the global financial crisis. Metal markets at home and abroad dropped sharply after the decision as many investors started to worry that it was just the beginning of a tightened credit market. From our data, zinc futures at home corrected lower by about 800 to 1,000 yuan after the price hit a level of 21,100 yuan/ton.

 

Domestically, our market research indicates that most local zinc market players remain optimistic about the coming market. The zinc ingot in the local market rose to a level of 20,500 yuan per ton in the last trading day of 2009, up 97% from that date in 2008 (10,400 yuan per ton). LME zinc also surged to a level of $2,575 per ton in late 2009, a 115% increase from that in late 2008 (1,199 dollar/ton). As indicated by this data, zinc both domestically and abroad has been trending up since the financial crisis of last year.

 

As of mid-January, most zinc traders and users are very cautious in making purchases with rising prices. Although they are bullish about the market ahead, they do not dare to take big chances in the current market. The zinc price has climbed above a level of 21,000 yuan per ton so far. Market insiders predict that the zinc price may hit again a new high in January due to increasing fund buying and moderately loose monetary policies around the world.

 

The local stainless steel scrap price along Pearl River Delta continues to fluctuate in a narrow range in early January 2010, and trade volumes in the market are still not very high, according to market research. Many recyclers and traders remain quite cautious in making purchases now. For one, the nickel market is unstable. It is still unclear where the price is going next. For another, due to poor sales in products, many steel mills are starting to cut their orders for stainless steel scrap, which may also lead to a decline of the price.

 

At the moment of this writing in mid-January, imported 304 stainless steel scrap is quoted around a level of $1,750 per ton. Therefore, despite the weak buying, stainless steel scrap pricing may not plunge sharply in the short term, with insiders predicting the price to continue to fluctuate in a narrow range.

 

Eric Deng can be contacted at tungshuzhi@hotmail.com.

 

 

NONFERROUS SCRAP>>CHINA>> TopRecycle, www.TopRecycle.com  

 

In the Nanhai and Qingyuan markets in December, many material users became inactive to buy with the Spring Festival approaching. As of January, the supply of copper scrap in the Foshan region are still quite tight. Volumes of scrap supplies from Dongguan, Shenzhen and the foreign market have been significantly limited. Some traders have said such conditions will continue in part because in Dongguan and Shenzhen, new orders of scrap from metals producers, terminals and button factories are limited.

 

Recently, with the local market supply tightening, local scrap processing plants have been shutting down. Some of these plants are considered to operate temporarily, depending on the supply of radiator scrap available. Generally speaking, the scrap radiator supply in was quite tight in December, causing some of those plants to shut down.

 

In the East China market of Shanghai, Ningbo and Taizhou, many recyclers retain strong optimistic attitudes toward scrap markets in 2010 and hold bullish sentiments about nonferrous metals prices. Some have held off on trading and build stockpiles in January and February to ensure they have material in March when factories resume normal operations after the holidays. A number of scrap businesses are more buying in the market actively with March selling in mind.

 

In the North China market of Tianjin and Baoding, ferrous scrap recyclers were pleased to see that on Dec. 10, 2009, Baosteel announced it would raise the prices of its main steel products across the board during January of 2010. In the following days, other domestic steel mills followed the price-raising signal. At present, despite weak volumes of purchases from steel mills, traders and recycling plants in the scrap iron segment are generally remaining bullish toward the middle- and long-term situation. Many recyclers have a desire to stockpile, causing ferrous scrap prices to climb slightly.

 

This report has been prepared by TopRecycle, a market information company found on the Web at www.TopRecycle.com.