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The Ferrous Scrap Market Remains “Luke Warm” | February 2016

Ferrous:

The ferrous scrap market remains “luke warm” as prices remain relatively flat compared to last month levels. Seasonal factors appear to be tightening scrap supply during the winter months.  Diminished supply is most likely responsible for January’s slight price increase rather than higher demand.  In the short term, steel prices are expected to stay sideways as demand remains low and the market awaits the outcomes of trade cases.

The uncertainty of the trade cases has somewhat limited imports into our market, but countries like China persist in saturating the global market, creating a ripple effect that continues to stifle demand in the U.S.

Apparently, the “Ferrous Groundhog” saw his shadow because our market forecast does not indicate an early recovery. Some scrap suppliers believe mills are reaching their needs for scrap restocking and March prices may be weaker unless the demand for steel products rises and therefore preserves the strain on scrap supplies.

Non-Ferrous:

A strong dollar and Chinese production slowdowns coupled with global economic weakness have weighed heavily on base metal prices thus far in 2016. Copper pricing moved below $2 per pound for the first time since October 2008. Although copper has declined progressively over the past twelve month, small recovery rallies have often followed new lows and last week copper bounced back, trading just above $2 once again. Primary aluminum market conditions appear dormant, with little to no market pricing changes. General Motors Co. predicted during a February 3rd earnings call that U.S. auto sales are “plateauing” – poised to reach around 17.5 million vehicles for the next few year. This news is better than the alternative, falling auto sales, but does not absorb the excess market capacity that exists due to global economic slowdown.  This year is likely to be another difficult year for commodity prices as they struggle to find their footing amid looming worldwide uncertainty.


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