Quite a few nonferrous metals may be finding a base at their present pricing levels. Despite significant geopolitical issues that continue to roil Europe and the Middle East, economies in North America, Asia and Europe are showing strength, which is benefitting nonferrous metals.
Aluminium, nickel and stainless steel each have shown upside strength in recent months. In Asia, recent figures point to an improving Chinese economy, which should be a positive development for most scrap metals. Several reports indicate that inflation concerns in China may have been overblown. This news has given exporters of scrap metals to the country a bullish outlook about Chinese consumers.
A report by the U.K. consulting firm FastMarkets.com notes that the Chinese consumer price index climbed 2.3% in July from year-ago levels. The figure was consistent with that of June 2014, albeit still below the government’s 3.5% target. Additionally, factory-gate prices dropped 0.9%, as anticipated.
According to several sources, China’s fairly positive economic figures may help to free up credit in the country, which could help strengthen the manufacturing base and result in larger scrap metal orders.
The outlook remains strong for stainless steel scrap. One of the biggest reasons has been the ban on exports of ores, including nickel iron, from Indonesia. The ban went into effect the first of this year. Prior to its introduction, China aggressively bought nickel units, building its inventory of the material.
With no indications that Indonesia will rescind the ban, China may look at substitute materials, including scrap, to feed its stainless steel mills as its nickel iron supplies dwindle.
The global market for aluminium also continues to point toward the positive side. Aluminium inventories continue to decline, reducing the vast oversupply that constrained the metal for the past several years.
Reflecting the bullish outlook for aluminium in Europe, the aluminium products company Novelis recently opened new recycling centers in Germany and Brazil. These new facilities, which have been ramping up production, are expected to help the company achieve its mid-decade target of 50% recycled aluminium content in its products on the way to its ultimate goal of 80% recycled content by 2020.
Additionally, Novelis is in the process of expanding capacity at its aluminium rolling mills in Korea and Brazil. The new facilities are expected to help the company grow its shipments and capitalize on strong global demand for aluminium flat-rolled products, particularly in the beverage can market, Novelis says.
The sole exception to the strength seen recently in nonferrous metals has been copper, which continues to struggle in light of high inventories.
Reflecting a less-than-optimistic tone, copper recycling firm Aurubis reported a loss for the most recent quarter and for the first half of the year. While the company notes that copper markets calmed following a March price increase, its future orientation is unknown.