Nonferrous Scrap, Western Europe, Italy

There was a slight slowdown at the beginning of 2011 following the Christmas holidays, but things picked up sharply as copper started going up on the LME. The export market has reached a standstill and has been there for a number of months now.

Even though Chinese buyers did come back and ask for offers on material, they probably bought material in the U.K; they didn’t buy from our domestic market. In fact, there’s been a correlation between the weakening of the U.S. dollar and LME pricing, and this has put scrap prices at a standstill. It has reached a level where domestic scrap prices are higher than what the Chinese are offering to buy the scrap CIF (cost, insurance and freight).

As of early February, it looked as if consumers in Italy were gradually increasing their purchasing prices, following the rise in LME copper pricing. On the other hand, copper was in strong demand until about mid-January Now things have quieted down and it looks as if all the European refineries have stopped asking for material, probably for the next one or two months. They are talking about new deliveries starting in early April. Consequently, this means that they might have to stop for all of February and maybe some part of March. I have a feeling it is because of the spreads.

Chinese scrap dealers were exporting to all these refineries and now have slowed down their purchases. Consequently, foreign scrap dealers have no intention of selling at the moment. Italian scrap dealers who want to buy scrap are increasing their spreads. Whoever wants to sell copper today wants to keep the price close to the LME, and buyers want to buy it at a higher spread so there is consequently very little movement going on.

Bronze ingots are going strong. Tin is holding up on the LME and so is nickel. It looks like the metals aren’t feeling much of the crisis, unless of course there is a lot of speculation behind it. At the end of the day it looks as if once the Chinese Year of the Rabbit is started, there is probably going to be a pickup in demand and prices [and] prices will gravitate toward the LME levels.

Aluminium scrap is in demand in Italy. It is mainly the cast and the taint/tabor as well as some profile scrap, some painted some unpainted. Those are the main items for the time being.
Fernando Duranti can be contacted at fernandoduranti@leghemetalli.it.