Ferrous Scrap

SCANDINAVIA>>Bjorn Grufman, M.V. Metallvarden

We’ll start with the nonferrous markets because that’s where the good news is. We have an interesting time. Things are moving in the right direction even if prices are much ahead of what we see in the market in this part of the world.

Both copper and aluminum are much, much higher than we should have expected, just from the market activities. Of course there are other parts of the world that are pushing prices upward. We see that consumption is starting. We are getting orders already for January so that’s good. There are some possibilities to buy scrap as well. It’s not a lot, but there is some availability again, which was rare just a couple months ago. It’s moving in the right direction on the nonferrous side.

Some sectors of our industry have started to get orders and started having some activities to generate scrap again. So it’s new scrap I’m talking about and that’s good because that makes it possible for us to do business again, which has been very tough in the last six months to one year. It’s a good time.

On the ferrous side we thought that everything was going the right way in September but suddenly here in November and December, the interest has gone down. We have seen some of the mills close down substantial parts of their production. We are worried on the ferrous side and even if the price picture is a little bit stronger in December, we expect it to come down a bit in January, which is not normal here.

Normally we see an increase in prices during winter time due to the snow but there is no demand right now. The steel mills are closing down. They are reporting that they have no orders and they don’t know what to do. It is a gloomy picture on the ferrous side for the moment.

Regarding the automotive sector, in our country we are producing Volvo and Saab. Volvo is running at 100 percent of capacity again but Saab is in very big trouble. They had a buyer who jumped off the hook two months ago. Now they are talking with another buyer but it wouldn’t surprise me if they are not successful and General Motors closes them down. That would of course hurt the Swedish automotive industry tremendously. It’s not just the fact that one factory will close down, it’s all their suppliers of parts. It’s a domino effect.

There is a lot of construction going on which is supported by the government. We have some tax deductions if you do repairs and new construction. But for the heavy stuff, like ship building and automotive is still not where it should be.

For the first quarter of 2010, people are saying that the order books are not coming in. There are orders but the buyers are waiting and waiting. They want to keep stocks low. There are some guys saying that we won’t get the orders until the beginning of January. But I think we’ve lost January already.

Bjorn Grufman can be contacted at bjorn.grufman@metallvarden.se.