Final Thoughts

Final Thoughts: Navigating the week in the recycled metals market

Written by Gabriella Vagnini

As we wrap up a busy week in the scrap metal industry, it’s evident that market dynamics are heavily influenced by global economic activities and regional events. Here’s a summary of the key developments across aluminum, copper, and steel scrap markets.

The aluminum scrap market has experienced steady movements with some marginal declines. Current prices for various grades are holding, with UBC said to be around $0.955/lb and 5052 bare at $1.17/lb. Despite a slight dip in LME prices, which was trading today just below $2,500/mt, the market remains stable. The strength of the U.S. dollar, bolstered by underperforming benchmark currencies like the yen and yuan, continues to influence metal prices. Economic indicators such as the April Case-Shiller home price index and June consumer confidence are contributing to market sentiment, with the Fed’s cautious stance on interest rates further shaping expectations. The Midwest, in particular, faces challenges from regional flooding, reminding us of the natural disruptions that can impact the industry.

In Lewis Leibowitz’s article, US copper scrap boosts China’s edge amid surging prices and shortages, he writes that copper remains in high demand, driven by China’s significant consumption and processing capabilities. The acute shortage and rising prices of copper scrap highlight its critical role in various industries, from automotive to electrical grids. Despite efforts to enhance U.S. manufacturing competitiveness, a substantial volume of copper scrap is exported to China, where it is refined and re-exported as advanced products. The U.S. holds a massive trade surplus in copper scrap, yet the domestic market faces challenges such as labor shortages, transport costs, and regulatory hurdles, hindering the expansion of domestic production. The dynamic between U.S. exports and China’s manufacturing strength continues to be a focal point, with potential implications for future trade policies.

The outlook for steel scrap is notably bleak as we approach July. Reports from Northern Ohio indicate a major buyer has paused scrap deliveries due to oversupply, reflecting a softened order book. Similarly, Chicago sources warn against over shipping, as mills are now avoiding carrying over excess shipments to the next month. This situation points to a probable price drop for prime scrap, affecting obsolescent grades and busheling. Additionally, the export market for steel scrap has remained quiet, with stable but potentially declining prices. This anticipated weakness in the domestic market could also impact pig iron prices.

In conclusion, the scrap metal market this week has been marked by stable aluminum prices, rising copper demand, and a challenging outlook for steel. As we move forward, the interplay between global economic conditions and domestic production capacities will continue to shape market trends. Stay safe, stay informed, and prepare for the fluctuations ahead.

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