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Markets lack lustre as short-term concerns weaken prices

None of the leading metals has shone in recent weeks amid continuing political and economic uncertainties. Meanwhile, Chinese authorities have issues guidance on restricted import grades.

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‘While non-ferrous mixed scrap imports into India are on the rise, Malaysia has jumped to the top of the list when it comes to supplying China’s imports of recycled non-ferrous metals, occupying a 14.7% market share in the first two months of this year,’ says David Chiao, president of the BIR non-ferrous division.

Compared to January-February 2018, China’s import market share from Hong Kong dropped from 21% to 11%. ‘Meanwhile the figure for the USA slumped from 15% to only 4%, according to Shanghai Metal Market,’ he adds. ‘The geo-economy is constantly shifting, technology is advancing and regulation is tightening. We are facing many challenges, and these are changing faster than we think.’

Aluminium

The aluminium market has been especially disappointing. After the euphoria felt briefly in 2018, nothing remains. Listings on the London Metal Exchange at the time of writing were around US$ 1 871 for high-grade goods while aluminium alloy was in the range US$ 1 370 to US$ 1 380. Primary aluminium traded at US$ 2 075 – 2 502.

Many analysts now believe that the bottom has been reached. The price of secondary blocks has been quite stable for quite some time and aluminium will probably develop sideways in the coming weeks, according to experts. There were also relatively few visible stocks in the warehouses of the LME.

High-grade stocks totalled 1 032 925 tonnes, with alloy stocks at 8 700 tonnes. The aluminium scrap market has remained disappointing in recent weeks. With weak trading volume, aluminium wire scrap was at US$ 1 795 – 1 952 and aluminium turnings fetched US$ 670 – 870.

Copper

Preliminary data from the International Copper Study Group in March indicated that world mine production rose by about 2.3% in 2018. The increase of about 460 000 tonnes was principally due to constrained output in 2017 and an unusually low rate of supply disruptions during the year.

World refined production is estimated to have increased by 1.5% in 2018 with primary production increasing by around 2% and secondary production, from scrap, declining by 1%. World apparent refined usage rose by about 2% last year.

Chinese apparent usage grew by around 5%, driven by a 20% increase in net refined copper imports. ICSG says it is possible this was influenced by tightness in the availability of scrap in China. The ICSG report from April says that, while world mine production remained essentially unchanged in January 2019 compared to January 2018, world refined production increased by 3% that month, although the scrap element was only up 1.9%.

Although copper’s current trading has been significantly weaker than expected, the metal is viewed positively in the medium term. In particular, the rising demand for copper for infrastructure projects should give the market a boost. At present, the high supply, especially in the case of scrap, has had a negative effect.

Copper scrap is abundant, and the warehouses are well supplied. Many traders have large stocks that are currently difficult to sell. But LME stocks are at a very low level of only 186 125 tonnes which shows that many stocks are now outside the LME warehouses and therefore barely recorded.

Nor is there a standard statistic for copper scrap. Grade A copper traded at US$ 6 440 – 6 442 on the LME. Bright wire scrap traded between US$ 6 002 – 6 203. Copper granules were worth US$ 6 092 – 6 170, and non-alloyed bright wire scrap was valued between US$ 5 901 – 6 114.

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