
Aluminum and copper prices have been trending upward for months but have become more volatile recently, as have spreads relative to terminal market pricing. The challenges posed by unpredictable pricing are amplified by logistics issues, an executive vice president with a scrap processing and trading company based on the West Coast says.
He points to the strength of the dollar as one factor that is affecting nonferrous metals pricing, adding, “It’s hard to keep track when there are these big sways.”
The executive says securing containers and bookings for ocean-going shipments is very difficult in certain parts of the United States as of late July. He cites ports in the Pacific Northwest in particular, saying securing containers and service out of Portland, Oregon, and Seattle have been especially challenging, with rolled bookings being a frequent occurrence.
“Logistics has never been more challenging,” the West Coast contact says.
However, he adds that consumers his company supplies have been “very cooperative and understand these challenges,” likely because they are experiencing them as well.
The vice president of nonferrous for a metal processing company based in the Midwest says trucking also remains challenging, though he’s not sure availability is tight. “I don’t know that there is tightness in the market; I think it’s just expensive.”
He adds, “To go any more than a couple of hundred miles away is tremendously expensive. We’re lucky in the Midwest that a lot of consuming homes are within a couple hundred miles.”
Regarding the high trucking rates, the Midwest-based executive says, “This is the new normal. Going somewhere for a penny a pound simply doesn’t exist anymore. We have to realize that, and buyers need to take that into consideration in their expense profile.”
“Everyone is dealing with the same issues,” the contact on the West Coast says, referring to transportation. “Once the deal is done, seeing the sale all the way through is very challenging,” he adds, noting that shipments can be delayed by two to three months for ocean-going cargoes. Despite the delays, he says consumers are not canceling their orders.
An executive with a red metals processor based in the Northeast says, "Clearly [transportation] is a major issue in terms of margin compression and also challenging availability of trucks."
Both men say nonferrous scrap remains in demand, particularly in the domestic market.
“On the aluminum side, there still seems to be demand, although deliveries are an issue,” the vice president with the Midwest-based scrap processing company says. He says the chip shortage in the automotive sector has affected melt schedules, causing scrap delivery dates to be pushed out further.
The Midwest-based contact says the situation is enabling export buyers of aluminum scrap to be more competitive in terms of pricing for material coming out of the Midwest. “With domestic spreads being moved out and delivery moving out, it’s creating a more even playing field for exporters.”
On the West Coast, the scrap company executive says export demand “is there for the most part.” He adds that South Korea, normally a large consumer of aluminum scrap, has been slow with its buying in June and July, seeking only a few particular grades of scrap. He says he believes the lack of demand from South Korea has a correlation with auto production in that country.
“The Midwest transaction price is still high” for many grades of aluminum scrap, the contact on the West Coast says. “If you have that metal, you can enjoy pretty good prices for segregated alloys that flow domestically.
“Even aerospace alloys have come up quite a bit from where they were,” he adds.
“There is ample demand by strip mills on the copper side,” the scrap company vice president in the Midwest says, adding that prompt deliveries are available. He notes that spreads for copper scrap relative to the COMEX copper price have not fluctuated much, despite the COMEX price falling from $4.80 per pound to $4.15 per pound.
The contact in the Northeast says, "Supply and demand seem to be in good balance, albeit at lower levels. The high and volatile copper market is keeping things moving as future market direction in the near term seems very unpredictable."
He describes domestic demand for red metal scrap as "extremely spotty," adding, "This has created significant challenges in order to best manage inventory levels and also staffing levels. Most consumers when they come into the market are looking for very prompt deliveries."
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