Renewed hope for the new year

Columns - Editor’s Letter

Several secondary commodities, including ferrous and nonferrous scrap grades, experienced a strong end to 2020.

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December 29, 2020

Welcome to 2021; you made it!

While the coronavirus is still with us, vaccinations began to be administered as of December of last year, providing what feels like real hope that the pandemic could be under better control by the end of 2021, leading to economic acceleration. Healthy Americans younger than 65 could be able to get their vaccinations as early as April, Dr. Anthony Fauci, who heads the National Institute of Allergy and Infectious Diseases, said in mid-December.

Additionally, as of Dec. 20, it also appears as if Congress finally has agreed on a second stimulus package that is intended to help individuals by providing those who made $99,000 and less in 2019 as much as $600 in direct payments, according to a Bloomberg article. (The text of the bill had not been released as of Dec. 21.) The bill also would add $284 billion to Paycheck Protection Program small business loans, $20 billion for small business grants and $15 billion for live event venues, Bloomberg reports.

This positive news follows a strong end to the year for many secondary commodities, including ferrous and nonferrous scrap grades.

“As the economy continues to strengthen on the positive vaccine developments, that should lead to increased demand for basic materials.”

In the nonferrous scrap sector, sources Recycling Today spoke with in mid-December of last year say that aluminum scrap markets began to benefit scrap processors in the second half of 2020 after having favored scrap buyers for some time.

Chad Kripke, executive vice president of Kripke Enterprises Inc., Toledo, Ohio, says, “There is a larger than normal mix of sellers who decided to weigh heavier on the spot market versus contract business for 2021. Scrap processors are feeling confident that 2021 will be the year to regain some leverage. With spreads remaining tight, it is still a seller’s market for the foreseeable future.”

As of mid-December, Davis Index reports that secondary aluminum producers in the U.S. were paying spreads that were narrowing by the day for most aluminum scrap grades. The news and price reporting service says the export market also is “applying pressure,” with “zorba pricing breaking 70 cents per pound and moving higher.”

Ferrous scrap prices also ended the year on a high note. December transaction prices tracked by Pittsburgh-based Management Science Associates’ Raw Material Data Aggregation Service, which were released about 10 days after Fastmarkets AMM Midwest Index ferrous scrap prices, show similar $80 per ton price increases for high-volume grades of the material.

These gains in pricing correspond in part with reduced scrap generation. However, as the economy continues to strengthen on the positive vaccine developments, that should lead to increased demand for basic materials and, potentially, increased demand for scrap.