Aluminum, copper supplies tighten

Departments - Commodities Nonferrous

Transportation-related difficulties have exacerbated the tightening availability of copper and aluminum scrap.

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December 2, 2020

Sources report tightening availability of copper and aluminum scrap, a situation that is amplified by transportation-related difficulties.

While aluminum supply and demand seemed to come into better balance earlier this fall, the opposite happened for red metals. As one trader for a processor with operations in the Upper Midwest and Southeast told Recycling Today in October, a number of copper consumers had outages scheduled as of mid-October or seemed to be drawing down inventories as 2021 nears.

However, as of mid-November, it appears that copper scrap is in tighter supply.

“[Aluminum] mills have had a lot of leverage for the last two to three years. We are seeing that trend switch a little bit to favor the scrap side.” – Andy McKee, president of materials trading at Kalamazoo, Michigan-based Schupan

A supplier of red metal scrap, particularly copper chops, who is based in the Midwest says, “We have seen a decline in some raw material to process, which I believe to be from the beginning of the pandemic.” He says wire supply has been reduced by the “abrupt halt” in construction projects, demolition activity and manufacturing early on in the pandemic. “I think we are feeling that lack of scrap currently.”

He says consuming mill demand is fluid. “Bottom line, demand domestically (and export as well) moves so quickly, it is hard to keep up. One month, domestic consumers cannot get enough material; the next month, they will push out your delivery a month or two.”

The copper processor says export demand has been soft lately, though some material has been moving to Europe. “I think that has been a new area of exploration for large amounts of different red metals.”

However, he says obtaining credit insurance for some overseas transactions has been more challenging in the pandemic. “Due to the pandemic, it appears credit insurance companies have downgraded many companies without any basis for doing so,” the copper processor says. “Regardless, [it’s] hard to sell to someone, especially in these tough financial times, if you do not have insurance on them.”

Aluminum scrap generation has been inconsistent across the various manufacturing sectors, Andy McKee, materials trading division president of Kalamazoo, Michigan-based processor Schupan, says. However, he adds, on balance, industrial generation as of mid-November is nearly consistent with the corresponding time in 2019 and up from the 50 percent volume reduction seen early in the pandemic.

McKee describes demand for aluminum scrap as “very robust,” particularly from the sheet mills that supply the can market. “Demand in the can sector is only strengthening,” he adds, fueled by the pandemic and the growing popularity of sparkling water and hard seltzers, which often are packaged in aluminum cans.

 

Regarding contracted sales for 2021, he says, “We’ve seen a small uptick in overall interest in contract metals.” This has been particularly true of can sheet producers, McKee adds. “Mills have had a lot of leverage for the last two to three years. We are seeing that trend switch a little bit to favor the scrap side.”

McKee and the copper processor mention trucking-related challenges.

“The price to move material is almost double at this point on runs that we have been making all year,” the copper processor says. “The only way to secure a truck is to pay more.”

McKee says truck availability and pricing are relatively steady in lanes where Schupan has consistent monthly movement. “It’s when you are trying to increase capacity that it becomes very expensive.”