Final Thoughts

Final Thoughts: A non-ferrous supply slump drags on

Written by Gabriella Vagnini

What’s happening with recycled non-ferrous metals? Where have the fundamentals gone? Was this just a Q1 supply slump, or will it persist? Flows are down, supply is tight, and mills are willing to pay top dollar.

Why does the lack of supply extend beyond the typical holiday slowdown? While extruders are substituting RSI for their 6061, 6063, 6105, just to name a few, it seems to be a costly short-term fix.

In the meantime, mills have reported positive trends; however, traders note that mills are flexible on prices – within reason. How many times have you heard mills being flexible? For example, UBCs realistically hover around 68%-69%, but mills have been paying a solid 70% of MWUSTP. While MWUSTP is still strong at roughly $1.29/lb, it is backed by a strong LME 3m last at $2,460/mt.

With the low flows and tight supply, the focus again shifts toward hope that the new sorting technology and low-carbon emissions facilities will transform the aluminum recycling industry, potentially alleviating, at minimum, the 20%-35% yield loss in processed/pressed recycled aluminum. Coming up, RMU will have a special contributor, Century Aluminum, to walk us through their new venture into the ultra low-carbon investment and what it can mean for you, so stay tuned.

On the recycled copper front, prices are up. Even with May and July Comex copper hitting around $4.30/lb, we are still seeing some sellers holding, waiting for prices to surpass $4.50/lb. Considering factors like the cost to carry and the 8% prime rate, traders say it’s a tough market. It’s always a tough market when you’re only working off of 2-cent prem. Even with the price rally, it’s still tough out there.

And I hope everyone noticed the gifted elephant in the room, as the Comex/LME May on May arbitration hit $93/mt, that’s roughly 4c/lb.

Further, Michigan awarded $50 million in funding to Cooperwood Mine to establish a copper mine in the UP (the UP, for us locals, is the Upper Peninsula of Michigan). The Cooperwood Mine is estimated to cost $425 million. It is being built in Gogebic County, near the White Pine North Project, a revival of the White Pine Mine.

Circling back to the rumor I posted last week about Kataman being sold to Korea Zinc, turns out my sources were spot on. Surprising, isn’t it? You can find more information about it here.

In ferrous news, there was a fire at Evraz last Friday, but fortunately, it was contained to their storage area, and no injuries reported.

In April, the ferrous recycled metals market encountered the possibility of a price decrease. Despite steel industry outages and reduced capacity, prices remained resilient and did not decline as initially anticipated. The auto industry continued to demonstrate steady demand for steel. Moreover, there was an observed increase in the flow of shredder feed and a rise in demolition projects, particularly noticeable in the Cleveland market.

Looking ahead, the outlook for May and beyond remains uncertain. Factors such as an increase in steel imports and broader economic concerns contribute to this uncertainty. Consequently, the market may experience ongoing fluctuations, making it challenging to predict future pricing trends with confidence.

For more information, read Stephen Miller’s recent article, and check out this week’s contributor article by Raymond Peterson.

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