Nonferrous scrap supply and demand well-balanced to start the year

This year has begun with the typical seasonal slowness in nonferrous scrap generation, with a cold snap hitting a wide band of the U.S. that extended from the Southwest to the Northeast in the third full week of January contributing to the situation.

An executive with a scrap processing company that operates multiple locations throughout the Midwest and Southeast says that while scrap generation has been lower from December of last year into January, it is not lower than normal given the time of year.

“Not much happens toward the end of year, so it takes some time to gear back up,” he says, citing slower demolition and manufacturing activity, in particular. “January and February are lower volume months because of where we are located.”

The executive expects his company will buy more nonferrous scrap in February than it has in January, barring significant weather events.

A nonferrous trader and executive with a scrap processing company based in Florida that also has operations in the Midwest says generation is slower in the Midwest given the weather and the decline in manufacturing activity associated with the end of the calendar year. His operations in the South haven’t been affected as much given that they are less dependent on industrial activity and weather has not been a factor. He says he’s hopeful scrap generation will improve in the Midwest as temperatures warm and manufacturing activity picks up.

The nonferrous trader says a cloud of uncertainty continues to affect nonferrous metal flows, values, consumption and demand. Among the concerns contributing to that uncertainty are the possibility of higher tariffs and trade wars.

“Will it happen at all? Will it hang over our heads for a while?” he wonders as of mid-January. That has led many, including him, to adopt a wait-and-see attitude. “The reality is no one knows. Will they be immediate or six months from now? Will they be broad or narrow?” he says of the possible tariffs.

This has created tentativeness in consumption, especially overseas, the trader says.  

President Donald Trump indicated Jan. 20 as he signed executive orders that he expects to put 25 percent tariffs on imports from Canada and Mexico starting Feb. 1, though he did not mention his plans to add tariffs to imports from China or more broadly.

The executive based in the Midwest says it is difficult to judge how such tariffs could affect his company, though he notes that Canada supplies a significant amount of primary aluminum to the U.S., while Mexico supplies cars and car parts.

“If the buyers and consumers of primary [aluminum] can’t get that in, eventually that hits us,” the executive says.

In the end, he says, tariffs portend negative outcomes for metal recyclers as they could increase costs and reduce production and associated scrap generation. However, the executive says, “We are trying not to predict what will happen. We are trying to control the things we can control.

However, he adds, “If they impose tariffs on China and China retaliates, that will be a problem for us because we do ship scrap direct to China.”

The executive says some scrap consumers in China have widened their spreads and lowered their offer prices, while others have backed out of the market completely for the time being.

The trader based in Florida says China has not been “very aggressive at all” in its scrap purchasing, noting that the approach of Lunar New Year celebrations likely is a contributing factor.

The arbitrage between the London Metals Exchange (LME) and Comex copper contracts also had been widening since late 2024 before tightening somewhat following Trump’s inauguration Jan. 20. The executive based in the Midwest notes that the Comex was 22 cents higher than the LME at the start of this year, narrowing to 14 cents following Trump’s statement on the Canadian and Mexican tariffs.

While the uncertainty clouding nonferrous markets is likely to linger until the Trump administration announces its plan for tariffs more broadly, generally supply and demand appear to be well-balanced in the domestic market for copper and aluminum scrap, the executive in the Midwest says.

“Demand feels better because less [scrap] is being offered. Consumers are more likely to buy what is being offered,” he adds, noting that this is helping to push pricing upward a bit.

Excluding the unknowns, the executive adds, it appears supply and demand will remain in balance for the next month or two.