While proposed regulatory changes in China are creating optimism among North American nonferrous traders, it has been overshadowed by the coronavirus outbreak in the country.

The new coronavirus, COVID-19, has been spreading in Wuhan, China, since December 2019. CNN reports that as of Feb. 19, 2,112 people in mainland China have died of the disease, and the global number of confirmed COVID-19 cases exceeds 76,200, though most of the cases are in mainland China.

U.S. nonferrous scrap traders have been feeling the effects of the virus-related disruptions to Chinese production as the country’s central government extended the Lunar New Year holiday.

“The coronavirus has everyone a little antsy,” says a nonferrous metals processor and trader based in the Midwest.

The virus also has affected the containerized ocean shipping sector. During its Feb. 20 earnings call, shipping line Maersk warned that Chinese manufacturing and the container volumes it produces may not rebound from COVID-19 until late in the second quarter.

“More spot buying is better for us. Engaging in long-term contracts provides spread risk for us because we are buying on a spot basis.” – a trader and processor based in the Midwest

Søren Skou, CEO of A.P. Møller - Maersk, said during the earnings call that low exports from China have caused the shipping line to cancel more than 50 sailings in addition to those that it canceled because of the Lunar New Year.

A processor and trader based in Southern California says container availability has been reduced and shipping rates have increased for shipments off the West Coast. “It has been very challenging to get bookings,” he adds.

While he doesn’t see that changing in the foreseeable future, he adds that it eventually “will pass and things will get back to normal.”

Material had been flowing more freely into the Asian market at the start of the year, “but just like that it was tempered by the coronavirus,” the Midwest-based trader says.

That tempered flow was reflected in the COMEX copper price, he says, which declined from nearly $2.90 per pound in mid-January to $2.60 as of Jan. 27, where it remained as of mid-February.

The trader based in the Midwest characterizes domestic aluminum scrap demand as “strong” as of mid-February, adding that opportunities to sell on the spot market to primary and secondary producers are available. He attributes this to the “lack of contract business that the mills engaged in at the end of last year.”

The Midwest-based trader continues, “More spot buying is better for us. Engaging in long-term contracts provides spread risk for us because we are buying on a spot basis.”

Both traders describe flow into their yards as slow. The Midwest-based trader says this is true of the retail sector and in keeping with seasonal trends.

Nonferrous grades also lost the help they received from rising ferrous scrap prices at the end of 2019, as shredded, heavy melting steel and prompt grades all dropped by $16 to $25 per ton on average across the U.S. in February, according to Pittsburgh-based Management Science Associates Inc. Raw Material Data Aggregation Service pricing.

Both traders say the second half of the year will bring more opportunities to sell high- quality nonferrous scrap into China without quota limitations.

The Southern California trader says he’s “cautiously optimistic” about the potential for increased demand from China. “No one wants to set themselves up for disappointment, but improvement could be on the horizon.”