Nonferrous Scrap: Italy

The situation has changed dramatically. The majority of consumers are not buying, mainly because of an accumulation of stocks, or they probably want to hold back on using their finances, being afraid of something spectacular that might happen. On the other hand, the last day of November and the first day of December, there was a sudden and unexpected rise in LME prices. Buyers are all desperate and banging their feet on the ground wishing they had bought before.

In a way, this is good news. On the other hand, traders and suppliers are a bit on the dry side because we stopped selling. No sales have been done at least for the last ten days. It is very difficult to give updated prices. Consumers of copper, zinc and lead are all quoting prices they have had stuck in their mind since the BIR (Bureau of International Recycling) Autumn Roundtables in October. Even though the LME has fluctuated, they aren’t taking that into consideration. They are taking consideration on the prices they have on their old contracts and they are using their old prices to buy the raw materials. If they send out 100 quotes and 25 buy and 75 don’t, at least they maintain their stock position.
Most people can afford to hold inventories, and some people can’t afford not to so they sell at those prices, which are probably two months behind. They probably need cash so they end up with 2011 not being a big loss. If they have cash, they buy for inventory purposes to have stocks at the end of the year.

People earned money and made a lot of profit in the middle months of 2011: March, April, May, June and July. They are quite happy to sort of rely on these profits until the end of the year. If they have excess money, they will probably invest it to keep stocks in December and start selling it in January, hopefully at higher prices than what they have ordered.

Very few people are complaining that they are losing money or have lost money during the past months. There is an attitude of “Who cares. If we aren’t selling we have enough money to live until the 31st of December and keep our yearly balance on top and hope for the best in 2012.” This started over a month ago. Everyone said, “2011 has ended. We will wait for the 31st of December. We won’t sell. We won’t buy. We have enough stock and we’ve made enough money.”
They will take whatever price to complete orders. It is a waiting game. People buy today for delivery in 2012. The heavy industry is doing well both in exports and in orders. It will probably continue in the early months of 2012 unless the order s are booked during these two weeks of December because on the 17th and 18th of December business stops and then won’t start back up again until January 9, after the Epiphany.

Fernando Duranti can be contacted at info@leghemetalli.it