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Non-Ferrous Scrap: The Pros & Cons in 2016

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by - 4/6/2016 6967 Views

Will the Non-Ferrous Scrap Pricing Weather out?

During the course of 2015, the prices of Copper, Aluminum and Nickel were on a downward trend in London Metal Exchange (LME), with the price of Nickel dropping most significantly, having lost nearly 35 percent of its value between January and November. The LME prices for Copper went down by about 17 percent over the same period, while Aluminum prices, seemingly the most stable of the three, fell by around 13 percent during the first 11 months of the year.

Two major factors according to recyclers, affecting the current weakness of nonferrous scrap markets: Firstly, the questionable economic health of China, with its economy on track to grow at a rate of between 6 percent and 7 percent in 2015, far less than boom-time rates of twice that level. The second factor, recyclers and other entities cite is the level of aluminum production in China, which they say has been threatening U.S. producers and the scrap industry as well for months.

The oversupply factor also has been driving a dramatic increase of imported Chinese aluminum into the United States. Figures from the Aluminum Association, Arlington, Virginia, indicate U.S. imports of semi-fabricated aluminum products from China grew 115 percent from 2012 through 2014. The association says the trend continued in 2015.

The excess of semi-fabricated aluminum also has affected export demand for scrap, says David Chiao of Atlanta-based Uni-All Group Ltd. and president of the Bureau of International Recycling (BIR) Nonferrous Division. Additionally, Chiao says, for the past year or so, aluminum consumers in China have increasingly used cheaper primary aluminum ingot rather than more expensive aluminum scrap from the United States to produce aluminum.

Now, added to the above mentioned factors, the winter weather has created another challenge for nonferrous scrap recyclers in parts of North America, adding a disrupting element to tight copper scrap, aluminum scrap and stainless steel scrap supplies.

In early February 2016, scrap recyclers continue to cite restricted supply as a foremost challenge. In a problem that has carried over from 2015, declining scale prices for each of the high-volume nonferrous scrap metals has taken its toll on supply, with the bad weather adding fuel to the fire. “Weather has impacted some generation, and material has been harder to find to fill our January and February orders,” says Matt Kripke, president of Toledo, Ohio-based brokerage firm Kripke Enterprises. “Segregated clips seem to be especially tough to find at the moment,” he adds.

Kripke says people are holding onto material, waiting for exchange prices to rebound. “I have spoken to a number of dealers that are piling up both copper and aluminum at these [price] levels,” he comments.

Jeffrey Mallin of Kansas City, Missouri-based wire and cable processor Mallin Cos. says he has witnessed sudden ups and downs in supply in early 2016 but characterizes overall nonferrous scrap flows as “slow to spotty.” Dealers playing the watch & wait game policy may be wearing down. “I believe smaller dealers are holding out for any rally and selling on spikes,” Mallin says. “This market deterioration has lasted longer than some expected, and small dealers need money.”

Scrap pricing continues to be challenged by questions surrounding China’s economic prospects in 2016. Two different reports by a Reuters journalist who specializes in the metals sector provide theories as to how events in China are affecting pricing for copper scrap and nickel scrap. In a late January 2016 report, Reuters columnist Andy Home says that while global demand for copper has taken a measurable hit because of China’s construction slowdown, continued demand for the red metal in other applications may soon offer renewed price support.

Home concludes “that the balance is sitting in bonded warehouses in Shanghai, where it is both available for SHFE delivery and being used as collateral in the shadow lending market.”

Category : Metal

Tags : Non-Ferrous Scrap, Copper scrap, Aluminum scrap, Nickel scrap, stainless steel scrap, scrap Price

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About Georgy Abraham

As the bright morning of 28th May dawned in the year 1972, in the fulfillment of time according to the plan & will of Almighty Godbrought me forth into this world and I was brought up & educated in Orissa. My parents provided me with the best of education in an English medium school with high standa .... more info


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