Nonferrous Scrap, North America

Steve Solomon, Solomon Metals Corp., provides a commentary on the nonferrous scrap market in North America.

February 8, 2012

In general, the flow of metal is actually decent. For this time of year, scrap is flowing relatively well. Copper continues to get stronger and appears to getting closer to the $4 per pound threshold, creating an environment for strong scrap pricing.

Domestic demand for copper and brass mills and foundries appear to be very strong. As far as export is concerned, we are still waiting for the Chinese to come back from the New Year, but we feel that they eventually will still be buying although we are unsure how aggressive they will be.

Aluminum is strengthening. Prices have moved up for primary grades with the LME. Secondary grades haven’t changed a whole lot relative to the market. We believe that they will strengthen through the first quarter into the second quarter.

We are actually bullish on manufacturing for the rest of this year. We feel material will be available from industrial accounts. We do believe there are dealers that have been holding metals as well and we believe they will be letting their metal out over the course of the next few months.

Freight rates have gone up since gas prices continue to stay high. Surcharges for over-the-road trucking are certainly a factor in where material is shipped. Freight rates have changed on the nonferrous end by maybe a quarter or half cent per pound when we are dealing with 10-20 cent swings in metal prices. You hate to pay the high rates but the relative value towards the price of the metal make the freight rates a smaller percentage of the trucking costs, but with tighter margins on all business freight remains a factor.

Overseas container availability has been mixed. On a week-to-week basis it is very inconsistent. We are being told that containers coming back from China have been in short supply. Finding consistent container availability seems to be a real challenge and strain for all exporters.

Overall we are bullish for 2012 on both volume and price. We have mixed feelings as far as how strong China will be as far as exporting and whether we will see the consistency we have experienced for the last seven or eight years. We feel very strongly that the domestic non ferrous business will have a Happy 2012.

Steve Solomon can be contacted at