August scrap prices are unchanged from July levels echoing the stability that entered the market over the past 4 weeks. Most mills and scrap suppliers around the country were satisfied with sideways trading in August after experiencing the frail pricing patterns during the spring months. Most markets saw sideways to slightly weaker trades on cut grade scrap (Heavy Melt & Plate/Structural) and prime grade scrap (busheling) while shredded scrap prices fell $10-15 in the Midwest due to higher shred inventories at the mills.
On the export front, prices did bounce up $10-$ MT in mid July causing many to speculate whether prices would also be up $10 domestically in August but the stronger offers were short lived with limited tonnage and many export buyers began to lower prices again as August approached. It appears that export markets will likely be unstable and volatile the rest of this year and may place little pressure on domestic steel mills.
The first half of 2013 has been pretty unfriendly for metal commodities. Aluminum and copper are both down 14-15% respectively while nickel is down approx 22% from its high point in February. Attached is a graph that depicts the negative trend aluminum, copper and nickel have experience so far this year.
Most of this volatility is to be blamed on the slowing of China’s economy and the freezing credit situation Chinese companies are experiencing. China is the largest consumer of scrap copper, controlling roughly 40% of the scrap copper consumed across the world. In addition to the Chinese problems, many problems still exist in the market due to the hangover from weaker European economies and their debt crises. Lastly, investors are affecting the commodity markets because they are cautiously investing due to the aforementioned world issues and their sporadic activity exaggerate the market conditions. This is because they flood the market with money on good news looking to capitalize on a short term market run, and suck their money out on a whim of bad news and further exacerbate the market swings.
Have a prediction for the Salt Lake City market? Share it with us in the comments.
Redwood Recycling is located in Salt Lake City, Utah