The story has been relatively consistent across the nonferrous scrap sector for some time: Supply is outpacing mill demand.
“Aluminum hasn’t changed in six months,” a processor based in Ohio says, citing excess supply and limited demand as the predominant market characteristics. The domestic market still has an abundance of zorba and automotive scrap that it’s trying to absorb.
The processor says the abundance of automotive scrap continues to affect primary mills. He says few outlets for this material exist and are limited in terms of the volume they can consume. “Mills are requesting no 6000 and 5000 high-silicon grades,” the processor says. That means this material is being funneled to mixed low copper clips, he says, which can include 3000-6000 aluminum grades.
“All commodities are struggling right now pricewise,” a processor based in Chicago says in mid-May. Regarding scrap consumption, he says, “It is slow out there on all fronts,” adding that copper and aluminum consumers’ “bellies are full.”
The Chicago-based source says he thinks buyers at consuming mills are taking a wait-and-see approach to their purchasing in anticipation of prices falling further.
“As it relates to aluminum, there is no end in sight to the primaries not operating in the spot market and deliveries being pushed out.” – a scrap processor based in Ohio
A Michigan-based processor says copper and brass scrap is flowing. “I would say that we never have trouble finding a buyer.”
He says his company has a pool of 10 buyers that he reaches out to when he has scrap available for sale. “I usually get good bids from at least five of the 10.”
For a while in early spring, delivery times narrowed from what had been the more typical 30 days to roughly 10 days, the Michigan-based processor says, with some consumers asking for immediate deliveries. With the start of May, however, he says mills have been extending delivery dates. “They may continue to increase, or they may turn around with the market going down so hard.”
The flow of industrial material into the Michigan-based company’s yard has been increasing since March. “The pace still seems to be pretty good,” the processor says as of mid-May, describing it as 25 percent greater than at the start of the year.
All three sources say markets could slow more before things improve. They cite automotive industry shutdowns to retool lines for the next model year that typically occur in the summer months.
“The old adage is ‘Sell in May, go away,’” the source in Ohio says. He adds that he’s unsure these temporary closures will have as great an impact on the scrap sector as they have in the past given the sector’s conditions the last six months.
“As it relates to aluminum, there is no end in sight to the primaries not operating in the spot market and deliveries being pushed out,” the processor based in Ohio continues.
Even if the U.S.-China trade war is resolved, he says he’s unsure zorba will resume flowing into China given the country’s scrap import restrictions. “The secondaries will keep buying this material because it’s cheaper, and that will put downward pressure on other secondary grades,” the Ohioan says.
The Chicago-based processor says he thinks things will get worse before they get better. “That’s why you hedge markets and try to protect yourself. You anticipate slow markets and work through them.”