Nonferrous

Nonferrous processors are generally upbeat about markets for their materials, though most concede that volatility will continue to be the name of the game.

Copper, nickel and lead likely will continue to show sharp swings throughout the first half of the year. However, even with these swings, many of these processors say there still is decent upside potential for these metals.

Copper continues to generate significant commentary from market observers. Despite downward movements in December 2007, many dealers say they feel copper markets seem to be primed for upward strength.

Heading into the winter, continued market volatility is expected. On the East Coast, one copper dealer says he is seeing further tightening of spreads, which indicates a fairly healthy appetite for the metal.

A number of U.S. processors of aluminum and copper say there is a great deal of uncertainty moving into the first quarter of the year. Along with the well-documented trends that have been driving some nonferrous markets, macro-economic issues, such as the weak U.S. dollar, are playing a growing role in the U.S. market.

One larger processor of copper scrap says there continues to be good demand for copper, both in the United States as well as overseas. This is helping buoy markets, despite the sharp price correction that took place throughout the fall.

Nickel, even more than copper, had enjoyed surging demand and sharply higher prices, as well as sizable volatility, early in 2007. However, after a tremendous run-up during the first half of 2007, nickel has been feeling some downward pressure. As China and Japan are indicating, there may be an oversupply on the market, which has resulted in sharp price corrections in December.

According to one analyst’s report, nickel, which reached close to $52,000 per ton in May 2007, has since lost around 50 percent of its value.

While the domestic markets for many nonferrous metals are taking a wait-and-see attitude, overseas markets are enjoying a better situation. A report in the BIR’s "World Mirror" has a representative from India noting that the aluminum alloy ingot industry in the country is healthy, while domestic aluminum scrap prices have remained firm. The representative, from Century Metal Recycling, predicted aluminum demand to grow by around 14 percent in 2007 in light of strong demand in construction, automobiles and durable goods.

A report by a representative from Germany in the "World Mirror" is even more bullish, noting that the building industry hasn’t changed recently, while expectations in other sectors are generally positive.

Aluminum, on the other hand, is of greater concern for many scrap dealers. In the U.S., a combination of problems in the residential housing sector and the auto industry are hitting the aluminum industry hard. "Things in the aluminum market in the U.S. seem troubled," one aluminum processor notes.

Balancing the sluggish domestic markets is the offshore market, which has been soaking up more of the inventory. Despite this, prices for aluminum are lower than those for lead, an anomaly for the industry.

One industry report notes that nickel has seen prices decline by more than 22 percent since the middle of November. The key reason for the decline is the indication that China, the world’s largest consumer of stainless steel, has slowed its buying of the metal.

With uncertainty in the copper market, the London Metal Exchange has been reporting an uptick in the stocks held in warehouses. According to one report, stocks in the middle of March of 2007 topped 191,000 metric tons, the highest level for the LME in around nine months.