Two Different Directions
The short-term fluctuations of nonferrous metals pricing can sometimes defy what is considered conventional wisdom.
Currently, nonferrous scrap dealers are faced with several puzzling situations when it comes to the metals entering their yards.
Aluminum scrap, which is almost always in high demand and usually in tight supply, refuses to present attractive margin opportunities, according to some dealers. Supply may also be building after a prolonged tight supply stretch.
“Margins are tight and prices are flat—there’s a lot of scrap out there,” says one Midwest processor. “Consumers are still fairly hungry though,” he notes.
Hopefully, that part of the scenario will not change, even with Commonwealth Industries Inc., Louisville, Ky., announcing a 15% to 20% reduction in shipments and the layoff of 300 workers.
Copper, meanwhile, seems to be re-awakening from its long-term price doldrums. Wider margins will be good news for processors who often ship long distances for domestic or export markets for No. 2 and other copper scrap grades.
At the consuming end, “sales are tough to make—demand is down, and even the export markets have slowed up,” says one dealer.
Another scrap company executive admitted to investigating the possibility of starting up a secondary copper smelting operation because end markets for some copper grades have become so diminished or distant.