Nonferrous

The late spring and early summer volatility in the nickel and stainless steel market has caused problems of its own—and concerns that other metals could follow a similar path.

The sudden change of course in stainless steel production and LME nickel pricing has caused a dramatic shift in the stainless scrap market from tight supply to oversupply.

In July, scrap dealers were reporting that the large stainless shippers were, in some cases, not even offering price quotes for some forms of stainless scrap. "The large stainless processors are all trying to work through their inventories," says one Midwest recycler.

That process could take awhile, as few if any stainless mills "are buying substantially for the month of July," according to the Midwest dealer. The recycler says one buyer advised him to hold on to stainless "until the first snow falls, then ship it. That’s how long it will take for this market to turn around."

Not all recyclers are convinced that holding on and waiting for a rebound is the best approach. "There is a divided school of thought," says a Great Lakes region dealer. "Some folks are holding on, but I’d say be careful, because those big processors have big piles they are trying to average down. We’re shipping [stainless] overseas right now," he continues. "We’re kind of living in fear of what nickel [pricing] is going to be by September [so] we don’t play around that much with speculating."

A trader at one of the large aggregators also says the export market is providing what good news there is. "There are still export orders keeping overall orders stable," he says. The trader says he would not be surprised to see the price bounce back up later this year. "By the time [domestic] order books open up, inventories will have been worked through, and that could cause the market to react."

Having witnessed a sudden drop in the nickel-stainless sector, dealers are leery about the future of copper.

The good news, according to one dealer, is that "the spreads are widening all the time" for red metal scrap. "If [Comex] copper is $3.50 per pound, No. 2 copper is a buck under; that’s what the nickel market should have done," he remarks. "With copper, if the market goes up or down, dealers check the spreads right away."

More worrisome are any signs of a potential slowdown in demand for copper scrap coming from China. "I’m seeing the export of high-grade copper scrap slowing," says one nonferrous shipper. "The pricing is not that great out of China right now, even for motors," he adds.

Demand for honey brass, motors and transformers is still good, he notes, although there are rumblings that regulatory authorities in China are looking into the importing and handling of motors.

As of mid-July, aluminum pricing and trading remained an island of stability in the nonferrous market. A Midwestern scrap dealer referred to a "typical summer flow" of aluminum, with one exception being an influx of aluminum siding from "insurance money kicking in" for repairs caused by earlier hailstorm damage.

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

Aleris International Inc., Beachwood, Ohio, has entered into a definitive agreement to acquire Wabash Alloys from Connell Limited Partnership.

Indiana-based Wabash Alloys uses aluminum scrap to produce aluminum

"We believe the acquisition of Wabash Alloys will be an excellent strategic fit with Aleris’s existing specification alloy operations," says Steve Demetriou, chairman and CEO of Aleris. "The transaction provides outstanding opportunities to broaden our customer base, optimize processing capabilities and enhance our ability to meet the needs of our customers."

Aleris International produces aluminum rolled products and extrusions, aluminum recycling and specification alloy production. The company also recycles zinc and manufactures zinc metal and value-added zinc products that include zinc oxide and zinc dust.

The company has 50 production facilities in North America, Europe, South America and Asia. Many of those facilities formerly operated under the names IMCO Recycling Inc. and Commonwealth Aluminum. Those two companies combined in 2004 to form Aleris, which is owned by private equity fund Texas Pacific Group of Fort Worth, Texas.

Rio Tinto and Alcan have reached an agreement for London-based Rio Tinto to make an offer to acquire all of Alcan for $38.1 billion. The offer represents a premium of 65.5 percent to Alcan’s all time high closing share price.

The combined aluminum product group, to be named Rio Tinto Alcan, will have significant bauxite reserves, alumina refining, hydro power and smelter technology.

The offer has been recommended for acceptance by the management and board of Montreal-based Alcan, unlike an earlier offer by Pittsburgh-based Alcoa that was meeting resistance.

"This transaction combines two leading and complementary aluminum businesses and is a further step in Rio Tinto’s strategy of creating shareholder value through investing in high quality, large scale, low cost and long life assets in attractive sectors," says Rio Tinto Chairman Paul Skinner.

After completing the acquisition, Rio Tinto Alcan will be the largest global producer of aluminum and bauxite, based on current production, according to a Rio Tinto news release.

The merger plan calls for the companies to create a new global aluminum division called Rio Tinto Alcan, which would be based in Montreal and led by Alcan’s current CEO Dick Evans.

As part of the merger, the Alcan Packaging business will be divested. That division makes products for several consumer sectors, including the beverage, food, pharmaceutical and consumer health markets.

"Alcan Packaging will have better opportunities for development and success following its divestiture and well will ensure a smooth transition for all involved," says Alcan’s Evans.

A 22-year-old Ohio man allegedly attempting to steal a power line for the scrap copper value was found dead in New Miami, Ohio.

Brandon Reed, of nearby Hamilton, Ohio, was found by detectives "tangled in lines" after the police department received a telephone tip, according to an Associated Press news item.

Police interviewed a second suspect who told them he left Reed at the site after arranging to pick him back up after Reed had cut down the wire.

But as the driver was leaving, he told police he "heard an explosion and a scream and called 911," according to the AP report.

The second suspect has been charged with complicity to attempted theft and is being held in the Butler County jail.

The Aluminum Association, Can Manufacturers Institute and the Institute of Scrap Recycling Industries have jointly announced that a total of 51.9 billion aluminum cans were recycled last year, an increase of 500,000 cans from the prior year. The figures for the year pushed the UBC recycling rate to 5.16 percent.

The aluminum can industry has been promoting the recyclability of the UBCs through its Curbside Value Partnership (CVP), a national program that helps communities grow participation in residential curbside recycling.

While the total amount of aluminum cans collected increased between 2005 and last year, the percent of cans collected dipped slightly, from 52 percent in 2005 to 51.6 percent last year.