Nonferrous Department

Stuck in Neutral

While ferrous scrap dealers watch pricing for both finished steel and scrap iron head upward this spring, nonferrous dealers are waiting for their markets to kick in.

Conditions are not necessarily gloomy for scrap aluminum and copper dealers, but they are also not indicating a sweeping recovery.

Copper pricing remains in what one wire processor calls a narrow trading band. "I have no complaints, as long as it doesn’t dip down below that," he remarks. The demand for copper is sufficient to consume what is taken in, he notes, although scrap copper wire and cable supply is limited to begin with.

"Copper wire supply is still on the weaker side, but we’re busy with more aluminum," the wire processor comments.

Both aluminum scrap dealers and secondary smelter operators are anxious to see what the summer will bring in their industry.

The good news is that a workable margin seems to have returned for aluminum secondary smelter operators. "The margins for secondaries have widened, and they need it," says aluminum broker Stanton A. Moss, Bryn Mawr, Pa. "If they don’t get that margin, you’re going to see a much smaller secondary market than you’ve seen in a lot of years."

Not as encouraging are supply and demand indicators that point to continuing flat conditions in overall industry activity. "We’ve seen a tremendous flow of primary into the LME warehouses," says Moss. "Supply has jumped up so high that is going to be the major factor in keeping this market down."

To what extent manufacturers cut back on their summer production schedules may determine the direction of the market. "I think we’re going to have a slow summer," says Moss." The demand for scrap has eased off and the immediate demands from secondaries have eased up as their inventories have increased."

Even with a seasonal slowdown in the works, though, the aluminum market could be poised to move forward if industrial production kicks in at a healthy pace in the fall of 2002.

SLIPPING AWAY

The recycling rate for used beverage cans (UBCs) is heading in the wrong direction, although the aluminum industry is still melting considerable amounts of the drink containers

The UBC recycling rate in the U.S. slipped to 55.4 percent in 2001, the first time it has dropped below 60 percent since 1988. The rate was calculated based on statistics gathered by The Aluminum Association, the Can Manufacturers Institute and the Institute of Scrap Recycling Industries Inc.

The aluminum industry paid $850 million to re-melt 55 billion UBCs in 2001. 100 billion aluminum cans were produced. The decline from 2000’s 62.1 percent rate marked a drop of nearly seven percent.