Market
September 27, 2024
Week in Review: Uncertainty ahead for scrap, supply chain disruptions and more
Written by Stephanie Ritenbaugh
Winter is coming – and that may provide some relief for scrap and pig iron prices. RMU’s Stephen Miller wrote that we’ve seen consistent downward movement for both products over the year, but the fourth quarter has traditionally meant price increases. Here’s a look at that story and more as you close your week.
The Federal Reserve’s decision to slash its benchmark interest rate by a half-point is expected to boost labor, construction and manufacturing, which is good news for scrap demand. Overall, there’s the “expectation that lower rates will bring down borrowing costs, which will help incentivize both consumer and business borrowing,” said Joe Pickard, chief economist and director of commodities for the Recycled Materials Association (ReMA). “Hopefully that will provide some support to construction in the housing market and other loans like auto loans and consumer spending. All those things tend to be positive for the U.S. manufacturing industry and for metal demand by extension. So the expectation is that it will be generally supportive for recycling.”
Speaking of ReMA, the trade group held its Roundtable in Chicago where non-ferrous discussion on striking next year’s deals (typical for this time of year) instead shifted to wait-and-see mode over uncertainty over prices, elections and China. As RMU’s Gabriella Vagnini reported, the next six to eight months could bring stability for aluminum and copper, but it’s just as likely that more companies will take a hit. If that happens, it could drag the market down with it. The scrap market might be the most stable part of the industry right now, but even that stability is hanging by a thread.
Aluminum recycler Novelis restarted its Sierre plant, which was severely damaged by a devastating flood at the end of June. The major assets could be restarted in the coming days and are expected to resume production by the end of October. As our parent company CRU Group reported, Novelis also mentioned that following the flood of the city of Sierre in June 2024, the plant faced significant challenges that impacted the company’s ability to serve its customers from the Sierre plant. Being a global company with operations in 33 locations worldwide, Novelis leveraged its wider European and global network to mitigate the impact on customers.
Eyes are still on a potential labor strike by union dock workers at ports from Maine to Texas that is threatening to disrupt supply chains up and down the Atlantic and Gulf Coasts. The workers are preparing to strike on Oct. 1 if the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) can’t reach a new six-year contract. Bloomberg News reported that the world’s top container carrier is urging customers to move U.S. cargo through East and Gulf Coast ports before Oct. 1. MSC Mediterranean Shipping Co. SA, in a customer alert Thursday, said talks between the longshoremen’s union and port employers “may not be resolved” by the Sept. 30 deadline, resulting in closures at terminals starting Oct. 1. That would delay the shipping of containers — both imports and exports — on trucks and railroads through ports from Boston to Houston.
A board of arbitration has ruled in favor of U.S Steel in a dispute with the United Steelworkers (USW) union regarding Nippon Steel’s more than $14-billion proposed acquisition of the Pittsburgh-based steelmaker. As our sister publication, Steel Market Update reports, the board, jointly selected by USS and USW, ruled U.S. Steel has satisfied each of the conditions of the successorship clause of its Basic Labor Agreement (BLA) with the union. The closely watched deal for the iconic American steelmaker was first announced last December. Since then, there has been pushback from the union and various politicians, including President Biden and current Democratic and Republican presidential nominees, Vice President Kamala Harris and former President Donald Trump. U.S. Steel and Tokyo-based Nippon Steel still hope to close the transaction by the end of this year.
Economic highlights next week
| Federal Reserve Chair Jerome Powell speaks | Monday, Sept. 30 | 1:55 p.m. Eastern |
| ISM manufacturing, construction spending, job openings | Tuesday, Oct. 1 | 10 a.m. Eastern |
| ADP employment | Wednesday, Oct. 2 | 8:15 a.m. Eastern |
| Initial jobless claims | Thursday Oct. 3 | 8:30 a.m. Eastern |
| ISM services, factory orders | Thursday, Oct. 3 | 10 a.m. Eastern |
| Employment report | Friday Oct. 4 | 8:30 a.m. Eastern |
