Nonferrous

Nickel scrap continues to shine in the market, even as some of the other nonferrous grades have slipped throughout the past several months.

One East Coast trader notes that demand remains strong as domestic consumers attempt to reduce high-priced inventories of materials.

Even with nickel prices climbing so sharply this year, signs indicate that much of the increase will hold up next year. According to some industry reports, nickel prices, which started 2006 at around $13,500 per metric ton, have climbed to more than $35,000 per metric ton.

Even with some retracing of prices to the mid-$20,000-per-metric-ton level, nickel producers are finding markets for their material excellent.

According to one report, Citigroup expects global nickel demand to have increased by 6 percent in 2006, even with prices being at a 20-year high. The price is being driven by the soaring demand for stainless steel, which uses about two-thirds of all nickel produced. However, Citigroup does expect prices to soften in 2007.

Meanwhile, new nickel supply is expected to enter the market by 2008 or later.

While nickel has shown the most significant jump in price, copper scrap continues to post impressive figures.

Despite labor issues, the copper market has held up fairly well toward the end of 2006.

However, there may be some declines coming down the pike. Several analysts speculate that copper may drop 15 percent next year to $2.61 per pound on average from $3.06 this year. The decline could continue into 2008, based on the median forecast of 11 analysts surveyed by Bloomberg. The reason behind the softening copper market is the expected slowdown in the U.S. economy, a major copper consumer.

Meanwhile, copper inventory levels have been creeping up, as the softer prices at the end of 2006 gave some sources opportunities to build up inventory levels.

While nonferrous stocks are low, especially for copper, signs point toward a modest increase in the inventory levels, which could keep a lid on prices in the short term. Labor-management issues at Chilean mining sites, however, could slow the supply build-up.

While many analysts say a slowing economy could negatively affect a host of nonferrous metals, the sentiment shared by many market watchers is that any retrenching of prices will be limited in scope and shouldn‘t decline too far.

As is the case with many commodities, the biggest uncertainty is what type of approach Chinese buyers will take in the market throughout 2007. Throughout this decade, strong buying from Chinese traders has been a factor.

During the second half of the year, however, reduced Chinese buying put downward pressure on prices. For the most part, enough other buyers stepped in that prices remained fairly healthy through the end of the year.

(Additional news about nonferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)

Affiliates of Texas Pacific Group (TPG) have completed the acquisition of Aleris International Inc., Beachwood, Ohio.

The TPG affiliates entered into a merger agreement with Aleris Aug. 7, 2006, for a purchase price of $1.7 billion plus the assumption or repayment of nearly $1.6 billion of debt.

Aleris stockholders will receive $52.50 per share in cash without interest. Aleris’s common stock ceased trading on the New York Stock Exchange Dec. 19 and was delisted.

TPG is a private investment partnership that manages more than $30 billion of assets.