Containership issues affect nonferrous scrap exports

Domestic demand for red metal scrap remains healthy, and high prices and container shipping issues are making it difficult for export buyers to compete for material, some sources say.

An insulated copper and aluminum wire processor based in the Midwest says scrap generation remains steady as the economy continues to rebound from the pandemic-related recession in 2020. He says high scrap prices and consumer demand are factors contributing affecting scrap generation.

“There is a very high demand for copper and brass scrap,” he says. “With this high demand domestically, I do not see any problems selling or delivering material into foundries.”

The processor says he’s noticed demand for bare bright copper decline as its price has risen. “I think a lot of manufacturers are finding ways to avoid using this material because of its expensive price and the fact that the specifications are too difficult to adhere to,” he says. “It appears people would rather buy No. 2 copper scrap, and [they] appear to be able to be flexible with how they use their raw material to make their finished goods.”

Trucking remains a concern for scrap processors and consumers, the contact in the Midwest says. “Transportation availability is still extremely tight, and the prices are up about 30 percent to 70 percent on any given run.”

He adds that truck drivers are being “strangled” by the demand for goods. “I do not see this phenomenon ending for at least another six to nine months.”

While export demand is subdued, the processor says, export opportunities are available. Pricing is less of a consideration for overseas consumers than the ability to get a booking on a shipping line.

Scott Greenberg of Atlanta-area brokerage firm Greenland (America) Inc. says containership lines are “randomly rolling bookings without notifying folks oftentimes.” This leaves suppliers “between a rock and a hard place” as their containers incur detention fees at ports while they await the next booking, he says.

The degree to which shipments are delayed varies by route and commodity, Greenberg says. He notes shipments to Pakistan seem to experience significant delays compared with those to India.

“There is plenty of scrap in the marketplace,” Greenberg says, but its movement is being obstructed by logistics issues.

He says some U.S. processors are looking more intently at domestic markets because while trucking companies might “charge you an arm and a leg” to transport the material, a truck typically can be found to cover a lane. Finding a booking on a ship can be another story, however.

In the case of repeatedly rolled bookings, Greenberg says it creates a dynamic where the contract between the buyer and seller starts to get old, raising uncertainty about whether it will be honored. “The industry standard is 30 days. Is the contract still valid if it goes to 60 days?” he asks. “Everyone is going to do what is in their best interest if the market is heading down.

“The nonferrous scrap situation is driven by logistics challenges we are all facing; it’s less about supply and demand,” Greenberg adds.

Regulatory issues also are affecting the movement of material globally. Greenberg mentions that as of the third week of January he’s heard that nonferrous scrap importers in Malaysia are indicating that customs agents at some ports are not releasing inbound loads.

Two Asia-based traders also have relayed stories of several such incidents to Recycling Today Senior Editor Brian Taylor.

The Malaysian government enacted new scrap inspection and purity standards on or about Jan. 10. It spent much of 2021 preparing to modify and adopt a regimen proposed by government-connected inspection agency SIRIM.

A trader tells Taylor the container clearance delays are a concern, but Malaysian buyers have not yet signaled panic regarding the situation. However, they also don’t portray a clear understanding of whether some grades could prove more problematic than others in the new system.