Talkin’ ‘Bout No Generation
Prices appear to be fairly robust for nonferrous metals. However, the problem continues to be, as it has been for some time, the lack of generation. A decline in new construction, slow auto sales and the general malaise in the economy have reduced the overall supply of nonferrous scrap available.
On the domestic side, many scrap dealers report that orders are plentiful, with domestic and overseas consumers looking for copper, nickel, stainless and aluminum. However, there just isn’t any excess material available.
Scrap metal dealers are scrambling to meet orders, while prices have been firming up for a number of metals.
On the West Coast, one larger exporter notes that markets are fairly healthy for various nonferrous scrap metals, with China active in the market.
Along with the shortage of scrap generation, container availability remains a problem for many overseas shippers of nonferrous metals. A host of exporters on the East and West Coasts note that it is becoming increasingly difficult to secure containers for shipments.
Adding to the problem, freight rates have been climbing quite significantly throughout the year, which is making it doubly challenging to fill and ship containers for overseas shipments. Some shippers say the container problem isn’t showing any sign of abating in the near future.
While the problem most directly affects smaller exporters, even larger dealers say they are having problems getting enough containers to meet their requirements.
For stainless steel, prices have run up from this summer, while generation has been declining. Handlers of stainless steel say the continued uncertainty in the market has resulted in less tonnage available to scrap dealers.
One handler of stainless steel says that while 2009 was the year of survival, 2010 might initially be characterized as the year of sustainability. Even with the possibility of a strengthening economy in 2010, it might take several quarters before there is enough vigor to change sentiment about the economy from slightly bearish to more positive.
One copper dealer describes the market as “limping along” toward the end of 2009. Orders are available, but, as with many nonferrous metals, the supply is muted at best.
On the West Coast, the outlook from one exporter is far more bullish. “Things are getting better,” the exporter says. “Demand is strong. Copper is way, way up. There is a shortage of scrap material in China, which is helping boost demand.”
But, like other regions of the country, the one sticking point has been the new generation of material. While generation typically is slow at the end of the year, the West Coast exporter says it is down by as much as 50 percent from normal December volumes.
Prices, despite a modest correction toward the end of 2009, have been fairly strong. Speculation has become a big concern for nonferrous dealers, as some investment houses have once again started to play a more active role in the market.
At the same time, a fairly weak U.S. dollar also has helped propel prices for many of the base metals higher.
(Additional information on nonferrous scrap, including breaking news, is available at www.RecyclingToday.com.)