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Monthly Archives: November 2011

Continued Decline

Continued Decline

 

Copper scrap markets continue to slump, falling nearly 30 percent from the high seen in early 2011.

The lack of buying from China, the world's largest consumer of copper scrap, is the reason behind the decline. China has been the beacon of hope for many scrap dealers in recent years. More recently, however, exporters find these same markets closed to new purchases. In addition, container shipments of copper scrap, as well as those of other commodities, are being held up by customs agents at ports in southern China.

One large exporter says he has 100 containers tied up at Chinese ports for a number of reasons, including differences in duty charges and an alleged lack of grade consistency. The exporter says Chinese customs agents claim that mixed loads of scrap metal fail to meet criteria for a clean container load.

 

 

Reflecting the slowdown in copper scrap shipments into China, prices continue to decline, with one source saying October prices are near $3.30 per pound on the Chicago COMEX. This is a significant decline from a few months ago, when prices for the metal were near $4 per pound.

The Wall Street Journal reports that, during the recently concluded International Copper Study Group meeting in Lisbon, Portugal, the deputy director for the Copper Department for the China Nonferrous Metals Industry Association announced China had nearly 2 million metric tons of copper scrap in inventory at the end of 2010.

This previously unmentioned inventory figure is not a surprise to many recyclers, however, who have suspected that China was building its inventory of the metal. However, it does confirm that inventories are far greater than what has been reported previously.

According to several recyclers, China is not likely to aggressively re-enter the market for more copper scrap during the next several months. A Midwestern scrap processor says copper markets will likely be challenging through the rest of 2011 and the first quarter of 2012.

Aluminum markets also are seeing some challenges, though several dealers say markets are not as difficult as those for copper. Domestic demand remains stable to strong. Despite modest price declines, most vendors say they are not having difficulties moving material.

Nonferrous metals markets are being affected by a number of macro-economic issues. During the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables in late September, several speakers listed a number of economic indicators that would pose challenges for secondary metals. Jason Schenker of Prestige Economics, Austin, Texas, said that while copper growth remained solid globally, there were inflationary pressures that were not likely to ease in the near term.

On the domestic front, Schenker added that while there are fewer ingot makers and copper foundries than there were two years ago, they are in healthier shape than in the past.

A promising sign for exporters could be the return of the Japanese market, as the country looks to rebuild from the earthquake and tsunami earlier this year. Several speakers said that during the next 12 to 18 months, this demand from Japan should help markets for secondary metals.

Bruce Jasiewicz with the steel service center O'Neal Steel, Birmingham, Ala., said nickel/stainless markets had a fairly promising long-term outlook. He said activity in the power generation and petrochemical sectors could help strengthen nickel and stainless metals markets, contributing to 5 to 10 percent growth in the next decade.

While promising, in the shorter term, stainless and nickel markets will be challenged, another speaker contended. Mark Parr with KeyBanc Capital Markets, Cleveland, said supply had caught up with demand and nickel could remain fairly soft through the fall and into the winter.

Also speaking at the nickel/stainless roundtable, Frank Santoro with Rochester, Pa.-based Cronimet USA, displayed caution, noting that there was more supply than demand for stainless steel currently. Production was slow, but there was still movement of scrap material, he added.

A number of roundtable attendees said consolidation and closures in the stainless steel industry, both in the U.S. and Europe, were likely to accelerate.

METALS- Copper down on Greek default worries

METALS- Copper down on Greek default worries

  

 By Silvia Antonioli     
  

 

Copper fell more than 2 percent on
Thursday as escalating worries about a Greek sovereign debt
default and a Euro collapse darkened market sentiment,
offsetting supply deficit concerns.
    Benchmark copper on the London Metal Exchange fell
about 2 percent to $7,760.25 a tonne by 0930 GMT from $7,885 at
the close on Wednesday, when it rose about 2 percent.
    Earlier, it hit a session low of $7,673 per tonne.
    The metal used in power and construction rose by about 15
percent in the last 30 days but is still about a quarter down
from a record high of $10,190 a tonne hit on February.
    "Today the escalating debt crisis in the Euro zone is
weighing on all commodities; the EU has frozen payments to
Greece and if Greek people say no at the referendum Greece is
bankrupt," Commerzbank analyst Daniel Briesemann said.
    "The fundamentals should support copper and other metals:
inventories have been falling across the board lately, Chinese
imports are healthy and cancelled warrants have been rising but
commodity markets at the moment are almost ignoring
fundamentals. They are politically-driven."
     The leaders of Germany and France told Greece on Wednesday
it would not receive another cent in European aid until it
decides whether it wants to stay in the euro zone.

    Greece could face bankruptcy if the population ends up
voting against the European Union's latest financial aid package
in a referendum, the chairman of the Eurogroup countries said on
Tuesday.
    European leaders were preparing for the possibility of
Greece leaving the euro zone to preserve the 12-year-old single
currency.
    A stronger dollar against a basket of currencies was also
weighing on metals.
    A stronger dollar makes dollar-priced commodities such as
metals costlier for holders of other units.
   
       
 
   
    STILL ROBUST
    From a fundamental point of view things looked brighter.
    Declining copper ore grades and strike actions at some of
the largest copper mine have cut supply significantly this year.
    Freeport McMoRan Copper & Gold's massive Grasberg
mine in Indonesia is producing copper at 5 percent of its full
capacity, a senior official at the energy and mineral resources
ministry said.
    Also a decline in metals stocks and a rise in cancelled
warrants in the last few weeks underlined
demand for industrial metals was still robust.
    Copper inventories in LME-monitored warehouses
fell by 1,150 tonnes to 422,125 tonnes, the lowest since
February, latest data showed. Inventories have fallen by about
10 percent in the last 5 weeks.
    "If we look at industrial metals' specific fundamentals, we
find that they are mostly positive for prices," Credit Suisse
said in research note.
     "For instance, inventories of aluminum, copper, nickel,
tin and even zinc have continued to fall. Availability is
deteriorating... This positive fundamental backdrop contrasts
the prevailing uncertainty regarding the economic outlook and
the policy measures surrounding the European debt crisis."
    In other metals, aluminium was at $2,138 from $2,127
at the close on Wednesday and zinc , used to
galvanize steel, was at $1,918.75  from $1,927
a tonne.
    Battery material lead was at $1,999.75
from $2,024; tin was at $21,875 from $22,000 and
nickel was at $18,550 from $18,580.

 

Nov 3, 2011
 

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