Nonferrous

Rumors circulate and doubts stir regarding nonferrous metals pricing, but overall demand seems to remain strong enough to keep prices aloft into the spring.

While some buyers may have hoped the Chinese New Year holiday would bring price increases to a halt, strong buying patterns have remained in place for copper, aluminum and other metals.

The latest news that could affect market fundaments is a looming tightening of scrap import regulations by the Chinese government. According to the Metallurgical Council of China, businesses exporting scrap to China will have to be registered with the federal government in Beijing by July 1 and receive subsequent approval by the government to continue shipping to Chinese ports.

The Council’s Meng Jianbin told the New York Times that the Chinese government is scrutinizing the scrap industry for its environmental practices. "Scrap processors are using very old ways to do the scrapping, which is very harmful to the environment," the Council officer told the Times.

Bureau of International Recycling (BIR) Director General Frances Veys remarked to the Times that the BIR would welcome such controls if they helped crack down on unscrupulous operators who have harmed the reputation of the industry by shipping loads that are closer to trash than to being a secondary commodity.

As spring gets underway, any effects of such regulations seem far away. Nonferrous recyclers are having no difficult moving material at market prices. One recycler calls the last several months "fun, for a change."

The higher pricing has not only provided a profitable trading margin, it has also brought in additional scrap in some cases. "Material is coming in from the wood work," says one copper and aluminum recycler, who notes that contractors and small dealers who may have been holding onto copper for just such an occasion are cashing in on the higher scale prices.

One international broker warns, though, that if Chinese consumers have been building up their inventories in anticipation of the import-export restrictions, this could cause a fairly sudden downward jolt in scrap demand.(Additional news about nonferrous metals and scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)

Imco Recycling Inc., Irving, Texas, has announced that its previously announced net earnings for the fourth quarter and full year of 2003 have been revised upward.

In early February, the company reported net earnings of $456,000, or $.03 per share, for the fourth quarter of 2003 and net earnings of $3.9 million, or $.26 per share, for the full year of 2003.

But just a few days later, a German subsidiary, VAW-IMCO, repaid an inter-company loan, realizing a transaction gain in light of changes in the currency exchange rates between the Euro and the U.S. dollar. FASB Financial Standard No.52 "Foreign Currency Translation" requires that the portion of the gain that occurred in the fourth quarter of 2003 be included in that period’s results, according to Imco.

Because of the new $1.0 million gain, or $.07 per common diluted share after tax, the company’s fourth quarter 2003 net earnings were $1.5 million, or $.10 per share. For the full year of 2003, net earnings grew to $5.0 million, or $.33 per share.

Imco has also announced that it plans to expand capacity at its Saginaw, Mich., aluminum smelter to help fulfill its commitment to supply a nearby General Motors facility with aluminum alloys. GM will be making aluminum V8 engine castings at its Saginaw casting plant.

Imco Recycling Inc. is one of the world’s largest recyclers of aluminum and zinc. The company has 21 U.S. production plants and five international facilities located in Brazil, Germany, Mexico and the United Kingdom.

A published report states the intention of a Chinese metals firm to expand its Shanghai complex to become the world’s largest aluminum smelter that relies on scrap as feedstock.

According to a report in The Daily Edge, Huang Chung Sheng, chairman of Ye Chiu Metal Smelting, says the firm is investing $20 million to expand its Shanghai complex so it will be able to produce 20,000 metric tons of aluminum alloy each month.

The Ye Chiu executive says the additional capacity is being planed to come online by 2006 and is being created in response to expected growth in demand for aluminum in China.

The news report notes that in its current 2,000-tpm state, the Ye Chiu smelter uses 30 percent local scrap while sourcing the remainder from other parts of Southeast Asia.

U.S. exports of copper scrap increased to a record 689,000 metric tons in 2003, a 35 percent increase over the 511,000 metric tons shipped in 2002, according to the data from the U.S. International Trade Commission.

China took in a staggering 70 percent (approximately), or 482,000 metric tons, of the total. Including re-exports, or scrap that was brought into the U.S., converted in the production process, then sent back out, about 79 percent, or 545,723 metric tons, went to China, according to the Commission figures.

While 1995 exports were higher in dollar terms, copper scrap exports surpassed the previous record hit in 1995 if measured by weight.

 Exports were sharply higher in all subcategories of copper scrap in 2003. Refined copper scrap exports grew by 48 percent to 316,000 metric tons, copper/zinc base alloy scrap was 41 percent higher at 78,000 metric tons, brass scrap increased by 32 percent to 48,000 metric tons, and other copper alloy was up 20 percent at 247,000 metric tons in 2003 over 2002.

The only other nations receiving even 35,000 metric tons of copper scrap from the U.S. were India, South Korea and Canada. The amount of copper scrap received by those countries was much closer to the 2002 total, differing from the massive growth in Chinese imports.