COPPER OUTPACING INDUSTRY
After a strong run, many ferrous and nonferrous metals have started retrenching. However, copper scrap markets have remained fairly resilient. It seems that reports appear almost weekly saying that demand for copper continues to improve.
After softening earlier this year, copper prices have rebounded. While many industry watchers still expect to see copper scrap prices decline this year, as of the middle of June, prices have remained fairly firm.
The biggest reason for the stable to stronger condition for copper scrap has been the lack of supply on hand. While new refining capacity is coming online, with significantly more expected to be operational within the next 18 months, actual copper inventories have been depleted, leaving many consumers with significant shortages.
As has been the case for the past year, China’s demand continues to be the major driver for the grade. Concerned about the availability of future supply, buyers have been bidding up prices during the past month, preventing a pronounced decline in copper scrap pricing from taking hold.
One Midwestern scrap dealer notes that Chinese buyers are buying as much copper as they can get, which is leaving supplies at a continued minimum level.
With limited copper scrap on the market, pricing should remain fairly stable through the next several months at least, says the Midwestern scrap dealer.
However, with so much of the scrap copper market dependent on the purchasing habits of Chinese buyers, there is some concern that if and when there is a pullback in orders from China, price and demand for copper scrap could drop sharply. This is one of the biggest concerns for many of the scrap processors in the United States. Because of the uncertainty surrounding copper scrap purchases from China, many domestic scrap dealers are trying to keep the material moving at a steady clip to avoid carrying any significant inventory in case a correction happens.
While there have been some scattered indicators that China may opt to pull out of the market temporarily to ease back prices, many of these same predictions were being made when prices first topped the $1 per pound range. At the present time, Comex copper prices are greater than $1.50 per pound.
The domestic market remains tight. With the sluggishness of the domestic auto industry, there is less copper scrap on the market, which is making the market for the available material much more competitive.
While most scrap dealers feel that copper should remain fairly strong through the next several months, many are hedging their bets to a degree. "I wouldn’t plan on inventorying any copper; just sell everything I get," one scrap dealer notes.
In other nonferrous news, stainless appears to be easing back. According to initial news reports from the Bureau of International Recycling (BIR), based in Brussels, stainless steel markets should continue to slow down. The slowing European economy combined with a decline in U.S. automobile sales has resulted in the stainless slowdown.
Additionally, China has been slowing its purchases of stainless steel scrap, which is adding to the softness in the grade.
Another factor playing a role in the stainless steel market has been the strengthening U.S. dollar, which has worked to cut into the demand for U.S. stainless scrap from offshore sources.
(Additional news about nonferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)
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