Scrap Metal Prices

Aluminium
LME warehouse stock builds are almost daily setting new record highs and are now over 3 Mt. Demand remains abysmal even though the price is today far below what many producers need simply to survive. It’s not a healthy situation when the main buyer is China’s State Reserves Bureau (SRB). All that does is prolong the agony in this vicious bear market.

Copper
Chinese buying of refined copper has assisted the price to rise by $500/t since the beginning of 2009 — a quite remarkable result given the otherwise poor prospects for demand this year. The SRB may buy as much as 300,000t refined copper to add to its existing stocks; this will no doubt keep prices unusually strong (given the circumstances) over the short-term. But when the SRB decides it has bought sufficient copper’s high wire act will look precarious.

Nickel
Rising exchange stocks and declining prices suggest even further production cuts by miners may be necessary to support the price. So far 230,000t of nickel has been cut, with Eramet the latest producer to reduce output targets. Downside risk is near $9,000/t.

Lead and Zinc
The seasonal high in lead replacement batteries will see the metal’s price well supported through what remains of the northern hemisphere’s winter. Zinc has no such support. The lead price will remain range-bound, while that of zinc may stumble lower before the substantial supply-side cuts begin to be felt.

Tin
Tin has a stronger mix of fundamentals than all other base metals. Indonesia’s ability to turn off supply as and when prices weaken should see tin remain above $10,000/t, 30%-40% above historical levels.

Steel
Steel demand is currently behaving as an excellent barometer of overall global economic health. On that basis we are living in a very sickly world — more rationalisations of production are likely, although US steel producers are no doubt taking some comfort from the US stimulus plan, with its embedded — buy American — emphasis.

Courtesy: www.commodityonline.com