Here is an article from the American Metal Market newspaper regarding the current non-ferrous scrap conditions. As you can see from the title there still is not a lot of positive sentiment in the scrap market trade. The major drop off in the COMEX market and LME which has caused scrap prices on both the ferrous and non-ferrous sides to steadily decline over the past month.
There are numerous reasons for why this is happening. The major issue we are seeing on the West coast is the Chinese economy announcing last week that its growth rates have slowed to it’s lowest levels since 2009. The Chinese government is not willing to subsidize the construction of new towns, buildings and other projects like it once was.
Another issue is the European Union dealing with the fallout of Greece and the decline in value of the Euro compared to the US dollar. With the dollar being strong against other currencies it makes trade very tough as buyers are losing money to purchase scrap by converting their money into US dollars.
As with every downturn in our market there will be an upswing as well. From my traders and what I see trending in the market I think we have reached the bottom or close to it for the scrap industry pricing. Most of my traders are estimating prices will go up by the end of the year. However any setbacks in China or Europe could cause our market to become more fragile than it currently is.
Nonferrous scrap improvement 'wishful thinking'
http://www.amm.com/Article/3475556/Scrap/Nonferrous-scrap-improvement-wishful-thinking.html
Comment:
PITTSBURGH — U.S. nonferrous scrap prices are failing to reflect more-positive macroeconomic data, leaving expectations of an improvement over the remainder of the year under question, according to the Bureau of International Recycling (BIR).
“We are halfway through the year and the expected upswing for 2015 has yet to materialize. The key question is whether conditions will actually improve in the second half,” Andy Wahl, vice president of BIR’s nonferrous metals division, said in the organization’s monthly report.
Even though improvements in some key U.S. macroeconomic data through June likely signaled that the outlook on nonferrous scrap prices “is not so bad,” this has not been the result thus far, Wahl said.
“You would think metal markets and flows would take the same positive direction. But, once again, this would be wishful thinking,” Wahl said in reference to lackluster price trends through the secondary aluminum, copper, lead and zinc scrap markets.
Aluminum scrap tags declined steadily in the second quarter and into July as prices came under pressure from ample supplies, weaker secondary alloy prices and volatility in the primary exchange market (amm.com, July 28).
The London Metal Exchange's three-month aluminum contract closed the official session July 24 at $1,639 per tonne (74.3 cents per pound), its lowest level since July 14, 2009, when it hit $1,594 per tonne (72.3 cents per pound). The contract closed July 28 at $1,649.50 per tonne (74.8 cents per pound).
“Recent swings on the LME and Comex should be viewed against the backdrop of the drama being played out in Greece, with exchange rate fluctuations and a continued strong U.S. dollar,” Wahl said.
Global nonferrous scrap markets will continue to face challenges going forward, David Chiao, vice president of Atlanta-based Uni-All Group Ltd., said in BIR’s World Mirror on Nonferrous Metals report.
“With many parts of the world in the summer period (marked by) seasonally slower demand and supply, and with the compounding effect of the Greek debt crisis and of China’s tumbling stock market, we seem to have a rocky road ahead of us,” Chiao said.
