Page 42 from: December 2014

42 December 2014

M A R K E T A N A L Y S I S

Non-Ferrous

Consumers voice concern over scrap supply
The year appears to be ending on a relatively quiet note for most non-
ferrous markets – but also with some optimistic observations about
medium-term prospects. As of December 2, LME cash prices are at
the following per-tonne levels (the corresponding figures from our
previous non-ferrous metals report of early November are given in
brackets): aluminium US$ 2021 (US$ 2057); copper US$ 6385
(US$ 6835.50); lead US$ 2025 (US$ 2015); zinc US$ 2195
(US$ 2335); and tin US$ 20 135 (US$ 20 125).

Closed: December 2 2014

Aluminium
In Europe, spot prices for aluminium
have followed the LME higher in recent
weeks, and the light metal industry is
generally positive about the medium-
term outlook. Aluminium use in Europe
is forecast to soar from 12 million tonnes
per annum to around 20 million tonnes
by the year 2050. ‘And this is a conserva-
tive forecast,’ notes Gerd Götz, director
general of the European Aluminium
Association (EAA). However, his organ-
isation is worried about aluminium scrap
supply at a time when the continent has
become a net exporter. The EAA says that
the goal should be to keep the scrap
within Europe although it adds that it is
not opposed to global free trade.
In line with primary material, prices in
Germany for aluminium wire scrap
(Achse) have been around US$ 2179
per tonne and aluminium turnings
(Autor) nearer US$ 1357. In the UK,
commercial pure cuttings have been
yielding some US$ 1760 per tonne,
loose old rolled cuttings US$ 1255 and
commercial turnings US$ 1190.

Light metal market conditions ‘are
looking significantly better than a year
ago’, according to Norsk Hydro’s pres-
ident and ceo Svein Richard
Brandtzæg. There has been ‘broad-
based aluminium demand growth
across segments and regions,
enhanced by substitution in many seg-
ments, including transport and electri-
cal’, notes a company statement. World
aluminium demand outside China is
expected to grow 3-4% in 2014 and
by the same margin in 2015, it adds.
Russia’s Rusal suggests ‘healthy’ con-
sumption growth and production cur-
tailments have led to a global alu-
minium market deficit of 900 000
tonnes in the first nine months of the
year (when China is excluded from the
calculation). And it forecasts that the
global aluminium market will experi-
ence a shortfall of 1.4 million tonnes
this year and will remain in deficit ‘for
the foreseeable future’.
The company expects global consump-
tion of primary aluminium to reach 55
million tonnes in 2014 for a year-on-

year increase of 6.5%. China is expect-
ed to lead the way with a growth rate
of 12%, followed by North America on
5%, Asia (excluding China) on 4% and
Europe on 3%.
According to latest data from the US
Commerce Department, the country’s
exports of aluminium scrap climbed
2.5% to 160 520 tons in September on
increased interest from South Korea,
Mexico and India. Leading buyer China
bought 105 471 tons of the total but
this represented a year-on-year decline
of 5.6%.
Latest information from the Metals
Service Center Institute reveals that US
aluminium shipments totalled 147 600
tons in October for an increase of more
than 8% over the same month last
year. This percentage mirrored the
increase in shipments for the first 10
months of the year as a whole, from
1.26 million tonnes in January-October
2013 to 1.36 million tons in this year’s
corresponding period.
Shipment growth was also recorded by
aluminium rolling and recycling special-
ist Novelis in its latest quarterly review:
rolled product deliveries increased by 7%
in the second quarter of the 2014/15
fiscal period to 765 000 tonnes, with all
four of its operating regions reporting
year-on-year shipment gains. This vol-
ume growth and higher aluminium
prices drove a 17% increase in net sales
to US$ 2.8 billion, prompting president

and ceo Phil Martens to highlight the
importance of increased customer
demand for lightweight vehicles, includ-
ing the new aluminium-intensive 2015
Ford F-150 pick-up truck.
According to China’s National Bureau of
Statistics, the country’s primary alumin-
ium output reached the historical high
point of 2.084 million tonnes in October
– equivalent to an increase of 2.1% over
the previous month and 6.8% over the
same month last year. On the Shanghai
exchange, aluminium edged lower from
its November starting point of Yuan
13 850 per tonne (US$ 2260). The
domestic market in China has remained
flat as smelters and traders have main-
tained a wait-and-see stance.

Copper
‘The outlook for copper remains
strong,’ states the latest financial
report from BHP Billiton. ‘Industry pro-
duction will be increasingly challenged
by structural factors including grade
decline and higher strip ratios, with the
availability of power and water a sig-
nificant constraint in several countries.
This is likely to result in a significant
supply deficit by 2018.’
Stefan Boel, chairman of the Interna-
tional Wrought Copper Council and
executive board member for Aurubis’
copper products business unit, expressed
concern at the 10th Asia copper confer-
ence over the lack of scrap globally.

RI-10 Analysis Non-Ferrous.indd 42 04-12-14 14:35