An increase in ferrous scrap pricing and flow that began in the fourth quarter of 2019 has benefited some nonferrous scrap grades heading into 2020.
After declining throughout much of 2019, ferrous scrap prices increased in November and December. This upward momentum continued into the January buying period, which saw pricing increase by an additional $30 per ton, according to Fastmarkets AMM’s surveyed pricing.
Some nonferrous scrap grades also gained in pricing at the start of the year. For example, No. 1 heavy copper and wire scrap was selling for $2.19 per pound on average as of early January, while No. 2 heavy copper and wire scrap was selling for $2 per pound, according to surveyed pricing from Fastmarkets AMM. This compares with an average U.S. price of roughly $1.95 per pound for No. 1 and $1.82 per pound for No. 2 in the December 2019 buying period.
“I don’t think we are over the hump. It still is a difficult marketplace, but it is a little better than in the fourth quarter.” – a nonferrous scrap trader based in the Southwest
“Flows are picking up across the board,” says a nonferrous scrap trader with a company that has processing operations in the Southwest. He attributes that to the “excitement” created by the increase in ferrous scrap pricing, which helps to bring nonferrous scrap into the yards.
Copper has benefited more from the uptick, the trader in the Southwest says. “Relative to aluminum, copper is in a better position with better balance in the domestic market.
“I don’t think we are over the hump,” he continues. “It still is a difficult marketplace, but it is a little better than in the fourth quarter.”
“Demand is slightly better, depending on the commodity,” says a nonferrous scrap trader based in the Midwest. “Export is much better, and prices have bounced off their lows for most nonferrous commodities.”
He says aluminum generation has slowed. “Three to six months ago, they could buy whatever they wanted whenever they wanted,” the Midwest trader says of secondary producers and primary mills. “Now, they are paying a premium for spot material.”
A copper scrap processor who wants to remain anonymous says that while demand has picked up, domestic consumers remain measured in their buying. “Demand is still slow in terms of what their needs are for 2020.”
He adds, “Pricing has stabilized, but spreads are still fairly wide in that it is a buyer’s market.”
The Midwest-based trader characterizes supply and demand for copper as being in “pretty good balance,” adding that the export market has helped to pull some material out of the U.S., such as Nos. 1 and 2 copper.
Aluminum is not enjoying the same interest from export markets, however. “Everything globally is tough right now,” the Southwest-based trader says. “Asia, specifically Korea, is swamped with aluminum.”
A nonferrous scrap broker based in the Southeast says the import quotas the Chinese government issued for the first quarter are “surprisingly generous.” As of early January, the country had permitted imports of 297,566 metric tons of copper scrap and 283,044 metric tons of aluminum scrap.
Regarding the “cautious optimism” he feels in early January, the Midwest-based trader says it could “go away in the blink of an eye” because of the lack of visibility that characterizes the business and the geopolitical forces that have been shaping the nonferrous scrap sector in recent years.