The new normal in transportation?

Departments - Commodities Nonferrous

Securing containers and bookings has become more challenging in certain parts of the country.

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August 2, 2021

Aluminum and copper prices have been trending upward for months but have become more volatile recently, as have spreads relative to terminal market pricing. The challenges posed by unpredictable pricing are amplified by logistics issues, an executive vice president with a scrap processing and trading company based on the U.S. West Coast says.

He says securing containers and bookings for ocean-going shipments is very difficult in certain parts of the U.S. as of late July. He cites ports in the Pacific Northwest in particular, saying obtaining containers and service out of Portland, Oregon, and Seattle have been especially challenging, with rolled bookings being a frequent occurrence.

“Logistics has never been more challenging,” the West Coast contact says.

However, he adds that consumers his company supplies have been “very cooperative and understand these challenges,” likely because they are experiencing them as well.

The vice president of nonferrous for a scrap processing company based in the Midwest says trucking also remains challenging, though he’s not sure availability is tight. “I don’t know that there is tightness in the market; I think it’s just expensive.”

He adds, “This is the new normal. Going somewhere for a penny a pound simply doesn’t exist anymore.”

The contact on the West Coast says, “Once the deal is done, seeing the sale all the way through is very challenging,” noting that shipments can be delayed by two to three months for ocean-going cargoes. Despite the delays, he says consumers are not canceling their orders.

Both men say nonferrous scrap remains in demand, particularly domestically.

 

“On the aluminum side, there still seems to be demand, although deliveries are an issue,” the vice president with the Midwest-based scrap processing company says. He says the chip shortage in the automotive sector has affected melt schedules, causing scrap delivery dates to be pushed out further.

The situation is enabling export buyers to be more competitive on material coming out of the Midwest, he says. “With domestic spreads being moved out and delivery moving out, it’s creating a more even playing field for exporters.”

“The Midwest transaction price is still high” for many grades of aluminum scrap, the West Coast contact says. “If you have that metal, you can enjoy pretty good prices for segregated alloys that flow domestically.”

“This is the new normal. Going somewhere for a penny a pound simply doesn’t exist anymore.” – a contact based in the Midwest

An executive with a red metals scrap processor in the Northeast says, “Supply and demand seem to be in good balance, albeit at lower levels. The high and volatile copper market is keeping things moving as future market direction in the near term seems very unpredictable.”

He describes domestic demand as spotty. “This has created significant challenges in order to best manage inventory levels and also staffing levels. Most consumers, when they come into the market, are looking for very prompt deliveries.”

The Midwest contact says spreads for copper scrap relative to COMEX have not fluctuated much, despite the COMEX price decrease.