Comments: 1
8 November 2015, Comments: 1

Ferrous:

Global steel demand is still on a downward slope in 4Q 2015, on the heels of slowing growth in China and weakening US steel consumption. This continues to negatively impact the steel and scrap industry worldwide and it appears that the world’s steel industry has, for the time being, reached the end of a major growth cycle. Prices on ferrous scrap grades fell an additional $10-20 ton in the US for November shipments.

North American steel mills’ greatest threat remains “unfairly traded” imports.  Tons continue to be pushed into North America at below market prices, despite falling steel consumption.  The situation is compounding a steel inventory glut in the U.S. and Canadian markets created by a flood of imports from South Korea, China and other “dumping countries”.  The U.S. Commerce Department has until April 1, 2016 to adjust the duties on imports of 15 Chinese products, a World Trade Organization (WTO) arbitrator has ruled.

On a brighter note, steel prices are not likely to fall much further as prices have become so low that it is becoming uneconomical to recycle due to the costs associated to process and ship scrap inventories. This has caused many scrap metal processors around the company to halt scrap shipments, idle plants or equipment, or even worse shut down altogether. Halted scrap shipments will eventually force mills to hold or raise prices to re-start scrap shipments. The steel industry could see a modest improvement next year if scrap prices stabilize and steel tags edge up on trade case rulings and continued robust demand.  Automotive and construction demand, a large end user of new steel products, remain strong and look positive headed into 2016.

Non-Ferrous:

Base metals continued their steep decline in October and have persisted to slip deeper in the first half of November with little optimism prices will firm up. China, being one of the biggest consumer of base metals, is at the center of the weakness as their factory gages continue to post negative growth figures indicating that manufacturing contractions have not hit the bottom. Global oversupply of copper, aluminum, and nickel continues to influence the market in a negative way sending prices to new lows not seen since the financial crisis of 08-09.  Early indications for 2016 mirror a similar market complex as today due to uncertain scrap consumption levels, a strong US dollar alluring cheap imports and curbing US exports, and election year politics in place. Ultimately, the market participants must adjust production efforts to match current demand needs and as a result prices will reach levels of equilibrium and eventually increase as the demand allows.

Below you can see the 1 month and 6 month pricing trends. I also found it interesting to see how far the market has fallen in 2015 – see the average 2014 prices compared to the average prices in October 2015. It’s been a tough year for commodities and I fear we are not yet at the bottom for base metals.

As of November 11, 2015 % Change
COMMODITIES 1 Month 6 Month
Copper Comex ($/LB) $           2.19 -9.1 -25.1
Aluminum 3Mo ($/LB) – LME  $           0.68 -5.5 -20.5
Nickel 3Mo ($/LB) – LME  $           4.30 -10.9 -33.9
Lead 3Mo ($/LB) – LME  $           0.73 -10.9 -21.6
Zinc 3Mo ($/LB) – LME  $           0.73 -12.9 -31.9
Gold (LB/OZ)  $    1,085.90 -6.7 -9.2
Silver ($/OZ)  $         14.42 -8.9 -12.8
Crude Oil ($)  $         42.86 -10 -32.6
Commodity 2014 LME Avg Price (lb) Oct 2015 LME Avg Price (lb) % Change
Aluminum $                  0.85  $            0.68 -20%
Copper $                  3.11  $            2.37 -24%
Lead $                  0.95  $            0.78 -18%
Nickel $                  7.65  $            4.69 -39%
Zinc $                  0.98  $            0.78 -20%

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One response on “Metals Continued Steep Decline in October | November 2015

  1. Brandon Samaris says:

    It seems to me that in the United Kingdom prices for metal commodities have reached the lowest possible levels and currently start to stabilize. The early 2016 data suggest stable steel prices for several days in a row and a slight improvement for non-ferrous metals. http://metalscraps.co.uk/news-scrap-metal-prices-in-the-united-kingdom-13.html In the same time, recently increased prices for copper have fallen again. These slight price fluctuations during previous couple of weeks may be attributed to an assumption that market is in a wait at the beginning of the new year and soon we will see a more or less precise idea about the price. it is not clear where the industry is going in 2016 to. Admittedly, prices will improve when demand for metal commodities reaches the previous levels and there is no oversupply of cheap production from China in the first place. Let’s stay optimistic and hope for improvements but 2016 seems to be another difficult year for metal industry. What are your anticipations about scrap prices in 2016? I’m looking forward to an article on this subject.

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