Nonferrous Commodity Report

Virtually all nonferrous metals continue to enjoy robust markets. Prices remain volatile, although there is definitely an upswing to the market, with prices for some metals cresting near record levels.

Copper continues to be a key mover. While prices sharply declined in mid-March, copper had been moving up fairly sharply during the past several months. It is far too early to determine whether or not this dip is part of a significant correction that could blow some of the froth off the market. However, discussions with some traders seem to point toward growing concerns about an overall downturn in the economy, and they say the decline was more a result of panicked selling rather than any significant fundamental shift in the overall positive signs for copper.

Along with copper, aluminum, nickel and other base metals, as well as their scrap complements, have been seeing far better prices. Meanwhile, spring usually means a surge in manufacturing, which could help to keep floor prices high for metals.

While many copper scrap dealers express confidence that prices will remain fairly robust through the spring, most concede that they are moving all the copper they can get and inventorying as little of the metal as possible. The reason: There continues to remain a whiff of pessimism that a sharp correction could knock prices down quite significantly.

While demand may be fairly good for copper, as well as for many other nonferrous metals, the big problem now is with getting equipment for offshore shipments, especially to China.

Several scrap dealers report that container availability continues to deteriorate, making it even more challenging to ship material offshore.

Another large scrap dealer says some vessels are basically switching their routes from a U.S.-to-China route to a Europe-to-China route in light of Europe’s better currency situation relative to the U.S.

While prices are fairly strong for copper scrap, there are some indications that many Chinese buyers are expressing their reluctance to pay higher prices for the metal. This has some scrap dealers concerned with the market going forward.

However, despite some of the apprehension, more scrap dealers say they expect to see demand remain fairly good through the first half of this year at least. While container availability is the biggest challenge for copper exporters, some scrap dealers say that the steamship lines have indicated that container availability could start to ease up by April.

The supply of copper also is a bit of a challenge now, though scrap dealers say they expect supply to improve in the spring.

Domestically, demand continues to be fairly healthy, which continues to keep copper moving at a good clip.

While copper dipped sharply late last year in response to global economic concerns, many buyers often buy base metals as a hedge in an uncertain financial market.

Aluminum, nickel, stainless steel and many of the other nonferrous metals also have been enjoying a steady and healthy rise in price and demand throughout the past several months.

The major caveat right now in regard to metals markets is the impact that the expanding financial crises could have on the metals market.