Traditional supply and demand is disrupted as industrial production falls across the world and traders assess ‘new normal’.
European metal markets are confused by the impact of coronavirus. While they were largely normal until mid-March – only business with China was disrupted – everything changed noticeably after that as European governments took various measures to protect their population from the virus.
Some industrial plants in Italy were shut down in mid-March and plants in Spain were added later. The industry in other countries – such as Germany, Austria or the Netherlands – continued to produce with certain restrictions.
In most European countries, though, industrial plants and scrap yards were still open and working.
However, almost all companies have had to adjust to the current situation and work with several teams at different times. If one team reports a coronavirus infection and the members have to be isolated, other teams can continue to work. There are also reports of companies setting up sleeping and catering rooms on the company premises so that workers can remain on site in the event of isolation.
The supply of protective masks was still guaranteed in most companies in March but these and other products are becoming scarcer. Business in many Western European companies remained satisfactory in March, partly due to contracts concluded in the previous weeks that could now be processed. But it become apparent in early April that there are no follow-up transactions. The European auto industry stopped production had a noticeable effect on metal markets.
Low prices on the London metal exchange are causing concern. This means that many traders are currently storing expensive metal purchases and not handing them in because they would lose a lot when they are sold.
As of 3 April, LME quotes (three months) were: aluminium HG US$ 1 486, aluminium alloy US$ 1 190, lead US$ 1 674, copper US$ 4 880, nickel US$ 11 257, zinc US$ 1 876 and tin US$ 1 4370.Scrap prices have also dropped noticeably compared to the previous weeks: Bare copper wire US$ 4 590 – 4 790; copper wire Ia US$ 4 590 – 4 850; non-alloyed copper wire I US$ 4 300 – 4 490; V2A US$ 705 – 890; V4A US$ 1 190 – 1 400 ; soft lead US$ 1 320 – 1 440; wire scrap made of pure aluminium; US$ 1 380 – 1 500; aluminium profile US$ 1 380 – 1 470.
Meanwhile, preliminary data from the International Copper Study Group indicates that world mine production in 2019 declined by about 0.7% with reduced output in the major copper mine producing countries more than offsetting growth in other countries.
World refined production declined by about 0.6% in 2019 with primary production (electrolytic and electrowinning) falling by 1% but secondary production (from scrap) up 1.5%. Preliminary world refined copper balance for 2019 indicates a deficit of about 340 000 tonnes.
The full non-ferrous market analysis will be published in the upcoming issue of Recycling International.
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