Challenges persist in non-ferrous market despite high demand

I want to share my key takeaways from ReMA2024 (formerly ISRI2024) which took place last week in Las Vegas.

After meeting with various yards, traders, mills and manufacturers, I walked away with the same sentiment, the same sad song and dance from the last few months – one could even say since November 2023.

“It’s tough out there,” said one trader.

That pretty much sums it up!

The pace of activity in the non-ferrous recycled metals market remains sluggish, even as demand from mills continues to soar. Various grades, including extrusion grades and used beverage cans (UBC), are in high demand, with everyone in the industry actively seeking them.

Despite strong demand, spreads between buying and selling prices have remained narrow, indicating a struggling market even amid recent price increases. That makes it challenging for market participants to build up inventory levels.

Interestingly, those who have not hedged their positions in the market appear to be holding onto their aluminum stocks. While these players are not facing immediate financial constraints, some are still awaiting potentially higher returns before making significant moves.

Mills, on the other hand, remain assertive in their purchasing activities, maintaining their aggressive stance to secure necessary materials for production.

The question arises: What is causing this issue?

Industrial flows, particularly in commercial construction, have dropped, and international imports have dwindled. This prompts speculation as to whether the recycled industry is only now adjusting to this decline in activity.

Sure, the new ultra-low carbon facilities that are being constructed will help alleviate this issue, but that’ll be two to five years from now. What about the next couple years?

With all that said, there is still optimism for increased activity, particularly in the third quarter and potentially throughout the year. With current sales subdued and flows back into mills sluggish, I find it hard to be that optimistic. Especially when we include geopolitics into the mix.