Maintaining the flow

Departments - Commodities Nonferrous

Despite transportation-related challenges, nonferrous scrap movement remained strong in October.

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October 26, 2021

Nonferrous scrap is flowing well as of mid-October, despite the transportation-related issues that continue to affect supply chains in the U.S. and globally.

“In general, demand is still really good,” says a marketing executive with a scrap processing company that handles postindustrial material at multiple locations in the Midwest and Southeast.

He says spreads have remained consistent for aluminum extrusions and other rolling mill grades in recent months. However, spreads have widened for painted siding and other secondary grades, the marketing executive says, and demand has strengthened as well.

“On the secondary side, things were kind of quiet,” he continues. “And now it appears like pricing is a little bit more attractive.”

A vice president of marketing and trading with another multilocation scrap processor based in the Midwest says the rising price of the common alloy A380 has brought up scrap prices on the secondary side. “We can sell our secondary aluminum, and right now prices are pretty decent.”

“For the right price, anything can move. But the wrong price can kill a deal pretty quickly.” – Todd Safran of Safran Metals, Chicago

Joel Fogel, executive vice president of nonferrous for Cohen, Middletown, Ohio, also mentions the widening of spreads for common alloy material, such as mixed low-copper clips and siding. He also notes increased export interest in this material. “That’s a different dynamic,” Fogel says. “I don’t know that we’ve seen global competitiveness as it relates to the domestic number on the aluminum side for several years.”

The marketing executive says export demand for aluminum pucks and turnings is “pretty healthy” and pricing is good.

“We’ve been pretty attentive to our export business recently,” he says, noting that transportation bottlenecks require close monitoring. “We’ve been keeping close contact with transportation and operations. Last week, everything that was scheduled to ship shipped on time. We thought we turned a corner,” he says in mid-October. “Today, not a single one of three export loads shipped because we could not get containers.”

While Fogel says aluminum scrap is moving well, some primary mills are pushing out deliveries. “You can’t really sell and ship in the same month.”

The marketing executive says he sees demand remaining strong through year-end, with “no signs of things slowing down.”

Demand and pricing also remain strong for red metals.

“The market ran up quite a bit since the middle of last week, and spreads haven’t widened, and that tells you something,” the vice president with the Midwest-based scrap company says in mid-October. “It’s an indicator of strong demand.”

“As it relates to copper, spreads haven’t moved very much as the market’s gone up,” Fogel says, adding that he thinks things will become more competitive on the copper side. He says there are announcements of new melting capacity in the U.S.

Fogel says, “I think there will be more demand for secondary type copper in the United States that hasn't existed.” He adds that this increased demand should work to narrow or maintain spreads.

According to Davis Index, spreads did begin to widen Oct. 19, when Comex copper closed at $4.71 per pound, an increase of 39 cents per pound from Oct. 12. The news and pricing service adds that many market participants expect the Comex copper price to reach $5 per pound before the end of October.

While Todd Safran of Safran Metals in Chicago says red metal scrap is flowing well, the high prices have some consumers sitting on the sidelines. Some need prompt deliveries, while a few others are one to two months out, he adds.

The vice president with the Midwest-based scrap firm says domestic and export demand for red metal scrap remains strong. Because of the supply chain issues, he says, “No consumer wants to lose much scrap.”

Cost-effective trucking is difficult to come by, Safran says. “For the right price, anything can move. But the wrong price can kill a deal pretty quickly.”