Conditions remain challenging for the trading of most non-ferrous scrap grades, most acutely for obsolete scrap used in secondary aluminium production. A slowdown in vehicle production that is both seasonal and cyclical, a sharp drop in published A380 prices, and more than enough scrap supply (courtesy of the US/China trade war and China’s new import policy) have created the perfect storm to deeply depress scrap prices to multi-year lows. Price levels are so low that they have acted as an agent of deep disruption to scrap supply; this has been particularly evident in grades requiring labour to produce such as clean auto cast scrap and clean old sheet scrap. At the current prices, that labour is not worth it.
It is unclear when and exactly how market conditions will improve, as it seems that there is inventory overhanging the markets at almost every step along the trading chain, be it scrap waiting to be picked apart, inventory at yards, RSI and scrap inventories at smelters, and spec ingot inventories at smelters, consumers and third-party warehouses. Throughout my 20-year-plus scrap trading career, I have seen ups and downs but don’t recall a low as deep and persistent as the current one.
With segregated mill grade scrap such as 6000 series, the situation is not as dire; however, finding delivery appointments at reasonable prices does require effort. Market conditions for No 2 copper scrap and yellow brass Honey are marked by the trading chain trying to cope with the new Chinese reality, meaning finding buyers with some remaining import quota and then figuring out whether containers can be shipped to China before their quotas expire. Higher copper grades such as Bright & Shiny face the least resistance to trading efforts.
At the time of writing, the Mexican peso stands at MX$ 19.57 to the US dollar; during the last 30 days, its low has been MX$ 20.16 and its high MX$ 19.36. The Mexican economy continues to face multiple headwinds both internal and external, namely the uncertainty created by the US/China trade war, the uncertainty in the US-Mexico trading relationship, and the still unclear signals from the new Mexican presidency to reassure investors.
Glorem SC (MEX), General Delegate of the BIR Non-Ferrous Metals Division