Nonferrous metals make gains

Aug 08, 2023

Inflationary pressures appeared to be exerting their influence across much of the economy except the metals sector through much of the summer and into the fall of 2022, with November appearing to be an exception.

“Metals woke up in November,” Bruce Shapiro, CEO of St. Louis-based Shapiro Metals, writes in his commentary for December 2022. “The dollar has weakened, and there is an inverse correlation between the dollar and metals.”

A scrap processor based in the Northeast echoes that sentiment, saying the weakening U.S. dollar relative to other currencies is having a positive effect.

John Gross of The Copper Journal and JE Gross Consulting, Huntington, New York, notes spot copper averaged $3.68 per pound on the COMEX during November 2022, an increase of 21 cents (6 percent) from the October 2022 price of $3.47. However, the November 2022 price was 69 cents (16 percent) lower than the October 2021 price of $4.37. Gross says the year-to-date average COMEX copper price through November 2022 was $4.02 per pound, 21 cents less than $4.23, which was the average price during the first 11 months of 2021.

Shapiro says spot prime aluminum was up 10 cents per pound over November, while the Midwest premium leveled out at 20 cents per pound.

“Personally, I think the metal market just had a minirecession and consumer demand will be strong going forward,” the Northeast-based processor says.

“Demand is stable, but deliveries have been pushed back into the new year,” he adds. “Generally, it feels like supply and demand are in balance. Red metals consumers have been slightly more aggressive.”

Shapiro says aluminum scrap buyers are in a year-end slow-buying mode, with most prime aluminum scrap and secondary scrap trading in the same range it did in October.

In his Dec. 9 issue of The Copper Journal, Gross writes that “low inventories continue lending support to the nonferrous family, with more than a few people being very vocal about the looming shortage of copper that will push prices even higher.”

Robert Ryan, chief commodity and energy strategist at BCA Research, headquartered in Montreal, tells Barron’s that visible copper inventories at exchanges globally continue to fall as they have for years and that the market is facing a global shortage related to a lack of capital expenditure to increase supply.

BCA Research is forecasting a physical global refined copper deficit of 595,000 metric tons in 2022, with copper supply and demand balances remaining tight over the next 10 to 15 years, according to Barron’s.

With winter starting, the contact in the Northeast says he expects nonferrous scrap generation to be limited, particularly for obsolete aluminum sheet and siding, while used beverage cans (UBCs) will see a smaller reduction in volume.

“We do see upticks whenever there is a break in the weather with temperatures above 40 degrees,” he adds.

Transporting metals has gotten a bit easier, the processor says, with trucking coming down in price and availability normalizing, though it remains on the tighter side.