Nonferrous Markets Still Uncertain

Following the latest BIR Non-Ferrous Division meeting in Dublin, it appears that hope rather than expectation is preserving spirits within the beleaguered non-ferrous industry.

Marc Natan, nonferrous division president, told BIR attendees: ‘Analysts are very pessimistic for next year for all markets except lead. But last year at the same time, the same specialists were very optimistic - they promised us a high level for copper, aluminum and all metals. They were wrong, and I would be pleased if they were wrong again.’

The meeting featured the traditional round of regional and country reports, as well as analyses of the aluminum and copper markets by two leading American authorities.

Honorary President Larry Sax said high aluminum stocks on the LME were a sign of consumer cutbacks, notably in the aircraft and car manufacturing sectors. The market was likely to remain depressed, concluded Sax, until such time as consumer confidence was restored.

Bob Stein, the nonferrous division’s senior vice president, agreed that a long-term upturn would require a fundamental improvement in the world’s major economies. Low interest rates, cheap money and low copper prices might induce fund-buying speculative interest, but this would bring only a ‘short-lived’ price improvement, he suggested.

Noting the recent announcement by Phelps Dodge of a 225 000 metric ton reduction in copper production, Stein pointed out: ‘It didn’t take the market long to throw off this production cut and go back to the levels it was trading at before the announcement.’ The meeting heard that analysts were predicting average copper prices of $1,575 and $1,540 for 2001 and 2002, respectively, compared to $1,840 last year.

In his market report, the Division’s General Delegate Hans-Peter Münster said there were scrap shortages in Germany for aluminum, copper, lead, zinc, nickel and tin. Domestic mills struggling to source sufficient raw material had been critical of traders exporting scrap outside the EU while the Russian export ban on copper scrap was heightening the pressure on Western European buyers, he stated.

For the Australia & Pacific Rim region, Divisional Vice President Kumar Radhakrishnan, SimsMetal Ltd, submitted a report in which he pointed to a reduction in the supply and generation of scrap ‘with some markets losing up to 50 percent of normal volumes across the board. Although the discounts for scrap to primary metals have narrowed, most processors are facing pressure on margins.’

Aluminum market conditions in the region had been ‘a lot more volatile’ than those for other metals, according to Radhakrishnan. Scrap demand from Korea’s de-oxidant producers had followed the fall in steel production while Taiwanese activity had slowed because ‘a number of secondary aluminum industries have relocated overseas and, in particular, to south China’.

Earlier, Stein had reported that U.S. scrap buyers in China had been particularly active of late in their pursuit of No 2 copper scrap. Values had benefited to the extent that, in certain areas of North America, ‘the separation of No 1 and No 2 copper scrap makes no economic sense’. He added: ‘This phenomenon will end, or at least be suspended, when Chinese governmental tax incentives to state-owned smelters come under review late this year, and the deadline for cargo arrivals attracting these incentives passes.’

Moving away from the markets, Johan van Peperzeel of The Netherlands said recyclers were still encountering problems with the Dutch government’s ruling that a mix of two ‘green’ materials should be subject to harsher ‘red’ list controls for trans-boundary movement. Furthermore, the Dutch environment minister was considering a proposal to force all companies handling above a certain volume of scrap to buy radioactivity detection ports.