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Metals market is still in oversupply | 2015

Ferrous Scrap:

Prices on scrap steel grades took another sizable hit across the country in August, falling $20-$30 ton domestically. These sharp declines are aligning domestic prices with offers from Asian exporters. This price relativity should act as a floor to hold the domestic price from falling further. This assumes the Asian markets will hold their current pricing levels despite a weak demand for U.S. scrap grades and the ongoing strength of the dollar. Prices have once again sunk to 6 year lows leaving those of us in the scrap industry to cry “uncle” as we hope for markets to show some mercy and return to more favorable levels as seen in previous years.  When prices were this bad in late 2008 and early 2009 the export markets (Asia & Turkey) were still hungry for scrap and acted as a catalyst to spur the market prices up within 6 months from hitting the lows similar to what we are seeing today. The export markets are much more feeble today and the domestic mills are able to “have their way” with scrap suppliers knowing they have leverage.  With capacity utilizations still above 73%, steady order books, and cheap raw materials (scrap, iron ore, freight) the steel mills are enjoying wider profit margins on the backs of scrap producers and suppliers.

Non-ferrous Scrap:

Like ferrous, the prices on base metals have been falling steadily the past 30 days. Both aluminum and copper prices fell an additional 7% this past month extending their summer long market slump. Nickel prices are still volatile but the pace of their price backpedaling has slowed, however, stainless and nickel alloy scrap prices continue to adjust downward as the market braces for price uncertainty and thinning 3rd quarter demand. Zinc and lead prices have also jumped on the price derogation bandwagon recently reducing the market prices for recycled batteries and lead.  Overall, the metals market is still in oversupply for the metals shown below and the surplus of inventory coupled with a strong dollar continues to support the current environment.



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