BIR Non-Ferrous Mirror – January 2010

Archiv – BIR | The following article is based on the latest Non-Ferrous World Mirror produced by the BIR world recycling body for the benefit of its members.
Following the troubles of 2009, the New Year has begun on an altogether more optimistic note. However, there is on-going doubt as to whether metal price increases are being driven solely by speculation or whether market fundamentals are playing an increasing role in this upward spiral. Copper and lead values have caught the eye above all others: the former recently ascended to a 16-month peak while the latter has reached its highest level for 20 months.BIR | The following article is based on the latest Non-Ferrous World Mirror produced by the BIR world recycling body for the benefit of its members.
Following the troubles of 2009, the New Year has begun on an altogether more optimistic note. However, there is on-going doubt as to whether metal price increases are being driven solely by speculation or whether market fundamentals are playing an increasing role in this upward spiral. Copper and lead values have caught the eye above all others: the former recently ascended to a 16-month peak while the latter has reached its highest level for 20 months.
In the USA, where the price of lead batteries is widely regarded as the most accurate barometer of business conditions, the reluctance of this market to follow the general upturn is being seen as a strong indicator that the situation is not as healthy as some people might care to believe. The same country also reports better-than-expected car sales and a strong desire among secondary smelters to buy scrap. But on the downside, aluminium giant Alcoa has announced further lay-offs in North America in response to a lack of orders for sheet material.
In Italy too, the same company has announced production stops at its Fusina and Portovesme plants, thereby supporting semi-finished aluminium product prices and demand, notably in the case of billets. All other domestic producers have already sold their first-quarter 2010 production.
Others might argue that the true barometer of metal market conditions is China given its huge influence on the non-ferrous world. As regards copper, Chinese buying activity on the international market has been boosted by the fact that prices on the Shanghai Futures Exchange are higher than those prevailing on the London Metal Exchange.
According to customs records, China’s foreign trade volumes dropped 17.5% in the first 11 months of 2009 whereas domestic consumption jumped 15.3% – an indication of the impact of domestic stimulus programmes. In another of the world’s leading developing nations, India, the stock market has posted a near two-year high and metals are outperforming key sectors such as automotive, IT, banking and finance. Optimism has been further fuelled by strong trading volumes despite high metal valuations, and by the positive moves towards finalisation of the country’s scrap import policy involving trader registration with local state pollution control boards.
The upbeat mood in the Middle East has been encouraged by a healthy trading month in December, with both copper and aluminium scrap sourced in decent volumes. The latter is continuing to head mainly to India, and the same applies to the Middle East’s lead scrap.
However, the sense of optimism is more muted in the UK where the economy remains in recession and domestic demand for copper remains extremely subdued. Severe winter weather has contributed to a general shortage of non-ferrous scrap, but an increase in value-added tax and the ending of the UK’s car scrappage scheme have adversely affected domestic aluminium ingot demand.
Reports from Germany and Russia suggest that trading activity in December was slower than the end-of-year norm. In the latter of these countries, holiday breaks, heavy snowfalls and temperatures as low as -30degC have restricted the tonnages of material available to domestic scrap consumers. Russian mills’ demand for material is expected to increase sharply in the second half of January.
From France come reports that European brass ingot-makers’ eagerness to purchase scrap is being thwarted by the more attractive buying prices offered from the Middle East and from deeper into Asia. European demand for aluminium is described as very weak while the zinc market is suffering from large stocks, a dearth of buyers and low scrap prices despite a higher LME quotation.
But to end on a positive note, the Nordic Countries are anticipating a far-improved economic and industrial performance in 2010. Their individual economies declined between 1 and 6% last year but are expected to record growth of 1 to 2.5% in the current year. Manufacturing output dropped 7% in Norway and 20% in Finland last year whereas growth of between 2 and 3.5% is predicted for the Nordic countries in 2010, thereby suggesting stronger demand for metals.
And from this region comes the suggestion that, to an ever-increasing extent, market fundamentals are justifying the solid price progress of non-ferrous metals.