Nonferrous Scrap, Middle East

With the Chinese being out of the market, we have had quite a drop in demand, tremendously from the Asian port. This does not include some of the higher grades of copper, but that [higher grades of copper] has not been as aggressive as it should have been. Almost a month prior leading up to the Chinese New Year, buyers in China slow their purchases. Until they come back to the market, this causes a disturbance to suppliers like ourselves.
The discounts have widened and we are afraid that when they come back to the market they will renege on their contracts. We are keeping our fingers crossed.

We have a limited demand from the European side instead for some copper since early December until probably the end of February.

On the aluminum side of the business, India has demand for some of the lower grades and we see also demand for the higher grades.

Overall, there has been a feeling of being wary about the volume we are intending to take and the budget for the New Year. The demand has slowed down, so first off, we have to cut down on our budget for 2012 already before we’ve even stepped a foot into it. The European market has experienced some financial difficulties in terms of overall economic news. Demand is just done from hand to mouth and hasn’t picked up.

The ferrous side is remaining on the local domestic supplies to the mills. The majority is going to local mills and outlets, and some the containerized shipments are going to some of the Asian markets but not in very big volumes.
We cannot export out of Saudi Arabia. They dominate the market and it is not a very good overall situation in the sense that we have a lot of steel that we cannot export out and we are obliged to listen to what the mills like to dictate in terms of prices. If they have a break for a month, we have to slow down and sit on supply. Around the first of the year, they slow down and we just hope they pick up the pace again.

It is pretty much the same old situation. It is just a matter of if we can get the budgeted volume just to survive out here.
Stainless steel is not in great demand. It goes to either Asia or Europe. I don’t think there is a great deal of generation of stainless. Very little of it is product scrap and is mostly from consumers. Europe has more production scrap. There are some opportunities out there, but it is not the day-to-day flow of supply.

Some of the political disturbances in the Middle East have slowed down the supply flow of metals that were regular channels of supply like in Syria, Egypt and Libya. It has the supply flow down by about 20 percent.

I think the second quarter will be pretty flat. Unless we have some high hopes that some of the stabilizing countries will be back in business for the second half of this year, we may pick up the pace. The second quarter looks to be a little bit flat. The construction business has slowed down. It has not bottomed out but is pretty much on a stable level right now. We got accustomed to a construction boom in 2010 and 2011. It is kind of a wait and see situation.

Salam Sharif can be contacted at salam@sharifmetals.com.