Markets for nonferrous metals continue to be somewhat robust in nature, though prices have been on a bit of a downward arc. In the BIR’s "World Mirror," a select group of representatives of the association see some fairly strong markets for aluminum and copper.
Ralf Schmitz with Germany-based VDM notes a feeling that seems to be more common with scrap dealers: "Sentiment within the metal trade remains cautiously optimistic."
Mohan Agarwal from India-based Century Metal Recycling Pvt. Ltd. and a board member of BIR’s Nonferrous Metals Division, notes the Indian market for aluminum scrap has remained strong during the fall, despite the slide in the London Metals Exchange and the appreciation of the Indian rupee against the U.S. dollar. The demand for aluminum alloys has also improved and is likely to stay strong in light of the festive season in India during the next two months. Prices for primary aluminum have fallen in line with the LME.
Imports of copper and brass scrap continue to be low in spite of increased demand. For copper, prices have been quite volatile, while domestic availability has been good, Argarwal writes. Low demand and surplus availability have kept the zinc scrap market quiet, and imports have been very low. The prices of nickel and tin have mirrored LME trends.
Agarwal also notes that Hindustan Copper Ltd. is looking for a substantial expansion of its capacity and has short-listed a couple of companies in Australia and Canada for a possible joint venture. Meanwhile, Vedanta Group company Hindustan Zinc Ltd. has achieved LME registration for the lead ingots produced at its Chanderia smelter in Rajasthan.
Agarwal also notes that National Aluminum Co. plans to double its alumina capacity to 3 million metric tons per year.
In the Middle East, Fadi Shahrour from Sharmetal Trading Co. writes that after a slow first half of the year, October was the best month for scrap processors in the Middle East. Supplies of scrap were available in above-average quantities, supported by the high LME levels for copper and lead. Chinese buyers returned to the market, but at higher discounts, making China just one of the options for scrap, rather than the main option it used to be. With other markets in the Far East competitive for scrap, most of the Middle East’s material was destined for this region, while European customers remained out of the market in light of high inventories and the availability of local scrap at cheaper prices, Shahrour writes. The primary and secondary aluminum industries continue to grow in the Middle East, with news of another investment or capacity increase in this sector monthly owing to the incentives of cheap energy and labor.
Mark Sellier of Capricorn Stainlessas and vice president of BIR’s Nonferrous Metals Division, writes that copper and copper alloy volumes have remained steady at lower levels in the past month and activity has been unchanged. Discounts have widened further, particularly for higher-grade copper items, and supply for local consumption has eased as a result. Local consumers are not finding material in such short supply, as export markets such as China have increased discounts dramatically.
Aluminum supply remains flat and, with prices not performing, it has become a rather dull market, Sellier says.
Ola Eklund with the Finish firm Kuusakoski notes that there are signs that the economy has stopped accelerating in the Nordic region. Along with the problems with the credit issue in the U.S., Eklund says there are indications that order books in the industrial sector are no longer showing growth. Some industries continue to run at record speeds, and optimism still abounds, but some analysts see slower growth. As for nonferrous metals, Eklund writes that most of the prices have recovered since October. Material is coming forward, but demand for scrap within the Nordic countries and in wider Europe appears insufficient, and discounts are growing once again. An increasing volume of material will be exported. The scrap market is oversupplied, with large volumes of material being offered, he says.
In Southern Europe, Carmelo Paolucci of Trantavizi writes that the domestic nonferrous scrap market is currently experiencing a tight period. LME prices have risen for the main speculative metals of copper and nickel, scaring the main consumers into adopting a just-in-time attitude to purchasing. Domestic demand for copper, brass and nickel alloyed products is very weak, and leading refiners’ stocks are still healthy, and refiners are refraining from buying spot material because of a shortage of orders. The main semis consumers are worried by price levels and also prefer to work on a just-in-time basis. He adds that the automotive industry is fulfilling positive expectations while other industries are not working at full capacity. Paolucci says buyers in Asia dictate the prices in Southern Europe by offering high levels and there has been an increase in their claims relating to shortages and quality. In addition, the poor rate of exchange between the euro and the U.S. dollar is penalizing all exporters.
German markets seem to be losing momentum, writes VDM’s Schmitz. The industry economy index eased for the fourth successive month in September. Companies are also adopting a more pessimistic outlook, possibly reflecting events on the financial markets. However, members of the metal trade remain cautiously optimistic. Demand for virgin metals has remained good, especially for aluminum, copper and zinc, with factory order books remaining full.
There is an adequate supply of scrap to the domestic market. Traders report an increase in Asian demand throughout recent months but, on the whole, Chinese buyers are still behaving in a conservative way.
As for the Chinese market, David Chiao with Uni-All Group, writes that Chinese markets have been in a tug-of-war between sellers and consumers. And with tax audit disruption and the thorough import duty investigation affecting the industry, the seemingly relentless Chinese industrial locomotive appears to be stopping to refuel.
For the Russian market, Ildar Neverov Scrap Market Ltd., writes that the main issue for the domestic nonferrous industry does not concern market fluctuations or scrap availability, but rather VAT. From Jan. 1 2008, nonferrous scrap operations are expected to become exempt from VAT. At present, companies can choose whether or not to apply VAT. Of course, merchants paying VAT find it difficult to compete with those who do not.