Final Thoughts

Final Thoughts: What just happened and where to go from here?

Written by Gabriella Vagnini & Stephen Miller

The Bureau of International Recycling (BIR) Convention & Exhibition taking place this week has sparked numerous engaging discussions among attendees.

A highlight was the international trade presentation, where a speaker from the EU elaborated on the growing protectionism supported by major mills, signaling significant changes ahead.

Participants also noted that volumes are slow everywhere, while remelt and refining capacity– especially aluminum in Spain– is increasing, indicating interesting times ahead.

One topic of conversation that seemed to be the center of conversation is the widespread confusion and frustration over volatile prices, and many are deeply concerned about the upcoming carbon emissions mandates and the scrap import-export verification schemes set to begin in 2026.

Non-ferrous market

Reflecting on the past week, the copper market has experienced significant turbulence. The short squeeze drove prices to a peak of $5.20/lb, but we’ve seen some stabilization as prices settled lower this week.

The surge in trading volumes and investment activity indicates a highly speculative environment, yet China’s ample supplies suggest that global shortages aren’t as severe as they appear. This disconnect between market perception and actual supply could lead to more volatility.

The aluminum market’s shift to a surplus and the drop in the Midwest Premium highlight better supply management, though speculators continue to influence prices. Overall, both markets are in a state of flux, with external factors like protectionism, carbon emission mandates, and fluctuating demand playing crucial roles.

Looking ahead, the copper market’s tightness and the scramble for scrap will keep prices volatile. For aluminum, the recent stability may continue, but vigilance is needed as market dynamics can shift rapidly. Understanding these trends and their underlying causes is essential for navigating the complexities of the metals market.

Ferrous market

The June ferrous scrap market is shaping up to be quite challenging. Conversations post-Memorial Day weekend reveal a lack of confidence that prices will hold at May levels.

In May, we saw prime scrap trade sideways and obsolescent grades drop by $10/gt-20/gt, but June could be worse.

Sources in the Midwest indicate a downward trend due to reduced demand. For instance, USS-Gary and Cleveland Cliff mills in the Chicago district are expected to reduce their melting programs, with May already being a low point. NLMK in Portage, Indiana, which usually purchases 30,000/gt-35,000/gt per month, will not be buying scrap in June. Additionally, Charter Steel in Wisconsin has announced an outage from June 18-21, and Algoma’s program is also expected to be weak. This leaves few EAFs in the Chicago area to pick up the slack, with slim chances of Nucor Kankakee stepping in.

Furthermore, a lack of ferrous scrap generation from larger industrial accounts suggests a potential slowdown in the manufacturing sector. A buyer in the Great Lakes region mentioned that demand is consistent, but with additional outages scheduled for June, scrap flows are just enough to meet current demand.

Overall, the ferrous scrap market looks weak for June. As HRC prices struggle to find a bottom, mills are unlikely to provide any relief to the scrap industry. We could see market prices drop by $20/gt or even more, reflecting the broader issues of reduced demand and manufacturing slowdowns.

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