As we close in closer to the Christmas break, metal markets still remain firm, although the Australian dollar continues to gain strength against the USD currently trading just under 1.05c. With many businesses closing their manufacturing plants sometime next week, strong physical demand for raw material is not expected to resume until January. With the slowdown in physical demand, we are also finding that many international traders are already starting to take a “wait and see” attitude preferring to price material when the market returns with some definitive numbers in 2013.
**** DJ MARKET TALK: Copper Imports Not Quite So Positive-Commerzbank **** By Laura Clarke @ dowjones.com
1322 GMT [Dow Jones] Real demand for copper is still “relatively muted,” despite upbeat import figures for the red metal, says Commerzbank. Import figures released by the Chinese customs authority–showing imports of copper, copper alloy and semifinished products rose 13.5% in November from October–paint a positive picture “only at first glance,” say Commerzbank analysts. “True, copper imports climbed [but] this still left them a good 19% below the year-on-year level,” they say. “What is more, figures for October were downwardly distorted due to the Golden Week holiday, which further puts the increase in imports now reported into context,” they add.
**** Sandy’s silver lining for scrap dealers **** By Gregory Meyer in New York and Jack Farchy in London
First came Sandy’s storm surge, now comes the tide of junk. As towns clean up after the US superstorm, piles of scrapped goods are appearing at kerbs. “There are hot water heaters, furnaces, dryers, washers, refrigerators, cars,” says Dena Flowers, a public works official in Little Ferry, a New Jersey town flooded by several feet of water. “Anything metal is out there.”
Sandy devastated places such as Little Ferry and is estimated to have cost the east coast tens of billions of dollars. It has released a wave of scrap metal into a market starved of supply since the financial crisis.
Scrap, the “urban mine”, has become an important source of many metals over the past decade as mines have been unable to keep up with the growth in Chinese demand. Steel scrap use hit a record 570m tonnes last year, or 38 per cent of crude steel production, according to the Brussels-based Bureau of International Recycling.
About a third of copper usage is scrap, and for some more commonly recycled metals such as lead, scrap is more than half the market, according to industry estimates.
But supply has not kept pace with demand. Americans have been hanging on to old white goods and cars, worried they could lose their jobs while the recovery remains fragile. This limits the volumes headed for shredding machines and ships. US exports of ferrous scrap have fallen about 11 per cent in the year to September. US copper exports are 5 per cent lower.
The biggest scrap reservoir on the planet has historically been the US, a very wasteful, wealthy, industrialised society. But with the rollover in the US economy and aftershocks of the GFC [global financial crisis], scrap flows generated by the consumer have been down.
Then Sandy flooded the biggest chamber of this urban mine: the New York metropolitan area. Out came the scrap.