Scrap Metal Prices and Scrap Metal Auctions

Excerpts from article on Commodity Online

The impact of the global financial crisis is now felt across the commodities sector be it crude palm oil, rubber or base metals even as gold continues to provide reasonable returns to investors as it is considered safe haven. Meanwhile, inflation no longer seems to be an issue for India as it has come down to 8.90 percent for the week ended November 8 due to the fall in prices of petroleum and manufactured products.

Base Metals
The global financial market scenario is bleak and this factor has led prices of commodities and equities lower. Since corporate activity is slowing down, there are major concerns over demand from companies for raw materials. Because of this we are seeing that the base metals market is following the trend of global equity markets and taking cues from them. In the last two months the base metals pack has witnessed sharp declines. But in the coming two quarters we could witness a revival in prices on the back of support from the Chinese stimulus package.

If this package is actually implemented then physical buying could pick-up and provide some respite to base metal prices. China has targeted to use a package of $586bn for infrastructure development and re-construction of earthquake struck areas of Sichuan.

Base Metal Outlook
The overall trend in base metals remains down as the global economic situation is weak and the recessionary impact is felt across the globe. We expect base metals to remain range bound and consolidate further as a major back-up has come by way of the Chinese stimulus package. This could be implemented in the coming year and may help in providing a respite to the weakening market.

Though inventories are rising the coming quarters could witness a pick up in physical buying from China if the stimulus package is implemented for infrastructure development. Fundamentally, we feel that production cutbacks by miners coupled with an expected pick-up in physical buying from China could help the complete base metals pack revive. But this could be seen in the coming year as we start feeling the impact of production cutbacks and physical buying. Until then, markets are expected to remain volatile.

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