Nonferrous Department

Quiet on the Western Front

If the scrap markets are a leading indicator of economic activity, the highly anticipated resuscitation of the manufacturing sector could still be several months away.

One wire processor notes there has been a dramatic decrease in material flowing through his facility in the second half of 2001, and the sector that provided a boost in the first half was excess inventory being scrapped—not exactly an earmark of a healthy economy in the first place.

Processors of both aluminum and copper decry margins that are, in the words of one, "somewhere between non-existent and thin."

Export markets remain a leading destination, with shipping off the West Coast to China stable, though not necessarily in a peak mode.

A broker of nonferrous scrap to China says demand from there is steady, although pricing is following the weakening trends experienced in North America.

Opinions are mixed in the guessing game of when the slump will turn around.

"I think it’s going to be late next year, if then," offers one Midwestern nonferrous processor. "There are too many segments of the economy that are being hit at the same time. It’s amazing to me that auto sales are still holding."

But a Texas scrap dealer sees "a hot market come November. They’re going to wake up and there’s going to be some shortages. The UBCs won’t be coming in like they are this summer, and eventually the closed primary capacity [in the Pacific Northwest] is going to catch up with them."