Prices for a number of nonferrous metals have climbed quite significantly during the past several months, and many scrap dealers say they see further price increases ahead.
Most recyclers contacted in November said they expected nonferrous metals prices to increase. Although many also say they don’t understand why prices continue to climb.
While the economy is slowly improving, it is not doing so at a pace that warrants such a strong run-up in prices. However, the weak U.S. dollar is helping many firms more profitably export nonferrous scrap, and China continues to purchase a significant amount of many of these secondary metals.
In what would appear to be counterintuitive opinion, many recyclers who deal in copper scrap are expressing concern over higher prices as well as market volatility.
One Midwestern scrap dealer notes that during the middle of November, prices for copper scrap topped the $4-per-pound level, only to drop to the $3.60-per-pound range a few days later. “There are so many influences in the market right now,” he says. “Hedge funds, a weak U.S. dollar and the export market are all playing havoc on the market right now.”
Another Midwestern scrap dealer who handles a significant amount of copper scrap says he is “not too comfortable” with the current market. “We rotate a lot of copper and try not to keep anything on the floor.”
Most scrap dealers say they expect the upward trend in prices for copper and aluminum to continue, at least through the first several months of 2011. “Although $5 copper is unlikely,” one scrap broker based in the East says, “it wouldn’t surprise me if it did happen.”
Also, one dealer says the spread between primary copper and scrap is widening, which he terms a disconnect.
Even with higher prices for copper scrap, the generation of new supply is muted. The supply of scrap from industrial sources has yet to rebound to where it was several years ago, though one recycler says there has been a modest uptick in the generation of metal from manufacturing sources.
The retail business has been fairly good, one Ohio scrap dealer says. In light of increased interest in the material, the dealer says his company is opening more satellite yards to collect material.
A Midwestern scrap dealer says nonferrous scrap from demolition sources is starting to come back a bit, though this sector is still down from several years ago.
Aluminum, while not as volatile as copper, also is seeing upward strength in price. Scrap dealers are reporting no problem finding homes for aluminum scrap, with one dealer saying, “Most people have taken orders for aluminum through January, although secondary aluminum hasn’t kept up with primary aluminum.”
Many scrap dealers say they feel the nickel/stainless market is close to being balanced. “It is about where it should be,” a Texas recycler says. Several other recyclers say movement is steady, with some short-term opportunities to ship material to a growing number of emerging markets.