Scrap Metal Industry Forcast

Three key regions of the world; North America, Europe and China, are displaying three fairly different outlooks for traders of nonferrous scrap metal. The North American market, especially the United States, is in fairly decent shape. Manufacturing has steadily improved, and movement and prices for most nonferrous metals have held up.

China, which has generated significant concern as the country has been showing signs of slowing down, continues to be somewhat active for copper and stainless steel, although there are mixed signals for some metals.

The European market, which has been struggling with economic problems in many pockets, is proving to be the most challenging region for the scrap metal industry.

Overall, most nonferrous metals are in a bit of a tough patch, with the continuing problems in Europe weighing heavily on copper and aluminium markets. Adding to the overall challenges, China, which has been a fairly healthy outlet for copper and stainless steel, is showing signs of a further slowing of its economy. The net result has been prices for several nonferrous metals slipping.

Despite some negative sentiment, overall prices are still at fairly high levels. In early May, copper has been trading at more than $3.75 per pound, although pricing seems to be trending toward the down side.

The aluminium market appears to be in better shape, especially in Europe. Several brokers note that prices remain stable and demand seems to be holding up. Shipments to China are moderately better. South Korea also has been more active for aluminium scrap, although Indian markets are slowing.

While aluminium markets are holding up fairly well, there are some moves being taken to prevent a significant overcapacity. Alumina Ltd., a large producer of material used to make aluminium, announced plans to lower its output target in 2012 as it forecasts slowing demand for aluminium.

In its quarterly report, Alumina Ltd. forecasts that global aluminium demand will increase by between 5 to 7% in 2012, slightly slower than 2011’s demand figure.

One consumer of aluminium scrap in India says that a big problem with imports of aluminium into India, as well as other scrap metal grades, has been the weaker Indian currency. The result is the cost to import any scrap material into the country has increased. “It is really a big issue,” the consumer says. “Everyone’s costs go up between 10 to 15%.”

Adding to the caution being expressed over global aluminium demand, according to Bloomberg, the Russian company Rusal is looking at closing a number of aluminium smelters as prices decline.