Scrap Tightness Set to Ease

The market is slowly improving for copper consumers as Comex/LME prices have drifted lower over the last two months and scrap prices decline. Whether prices will get back to the levels seen last December of $6500/ton remains to be seen, but falling scrap demand in China has helped the availability of raw material supply to domestic US mills. Opinions vary as to why demand has dropped off —  many believe it is due to industries closing down ahead of the Olympics, others point to the tightening credit situation in China and the rising cost of sorting scrap, making scrap imports less attractive. Either way, the drop in Chinese demand on top of the normal North American seasonal lull has proved welcome for consumers.

Copper demand in China is still strong, however, and although current requirements are being met by concentrates, scrap requirements are likely to pick up again after the summer. Both Asian  and European producers are experiencing positive growth if a little lower than last year.

Aluminum on the other hand is getting a welcome boost in supply from Uncle Sam as around 2000 obsolete warplanes and rocket parts went on sale last month. Some of the planes like T-34 Trainers date back to 1948 and have been parked for decades at Davis-Monthan Air Force base in Tucson Arizona. But before you rush out to buy your piece of history (yes the thought occurred to me too) buyers have to cut up the aircraft into 16 x 16 pieces before they can take it away. Apparently the military doesn’t want the items to get out of government control and risk national security according to the company handling the sale, Liquidity Services Inc. To be fair, in addition to the old T-34’s there are C-141 Starlifters, A-4 Skyhawks and even parts from Titan Rocket Launchers among the approximate 27 million  pounds of material. With prices at near record levels for the decade, it looks like the military got their timing right on this one.

–Stuart Burns

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