n° 168 – September/October 2020

The USA continues to take the unwanted lead with COVID-19 numbers: with 4% of the world’s population, the country has around 20% of the infections and related deaths. Much of the response has still been regional, with little consistent guidance on a national level.

Conspiracy theories are prevalent, and masks are viewed in a political fog with inconsistent regard for science or medical advice. With less than two months to the Presidential elections, polls are showing Joe Biden leading in the polls - but polls were not a great indicator in 2016. At the same time, the USA continues to have trade battles with China, Europe and Canada.

US job losses are still substantial and have been running at a rate of around 800,000-plus per week. The unemployment rate for August was 8.4% and is trending downwards; at the height of the pandemic, it was as high as 13.3%. More businesses are reopening, including those in the service and hospitality sectors which were very hard hit. One of the positives is that US manufacturing remains in expansion mode, with a recent analysis indicating that activities are now slightly ahead of pre-COVID levels.

Housing is very strong, with people moving up or making improvements to their current properties; the idea of working and schooling at home is now commonplace. Auto sales are strong whereas aerospace is so bad that OEMs are pre-paying their supply base to keep them solvent while business is poor.

Scrap demand is generally strong in the USA. Secondary aluminium prices are up more than 20% since July, with very tight supply. There is also high demand from the export markets, and domestic producers are stretching to bring in the units they need. With auto sales and production very strong, ingot prices are rising - but much more slowly than scrap pricing. As always, secondary ingot makers find themselves in a squeeze between their suppliers and customers. Rolling mills and billet makers are also seeing improved demand, despite several of the mills having operational issues in the summer that have kept them from producing at optimal levels. Extrusion scrap and certain rolling mill alloys are in tight supply. In general, scrap spreads are tighter to our all-in aluminium price, mostly due to supply tightness and healthy demand. The USA also saw a brief spike in our regional premium owing to a short-lived tariff on Canadian aluminium.

Copper scrap has seen a very quick and severe widening of spreads as the terminal markets increased while demand withered. Copper scrap is abundant in the USA, with not too many places to go. Brass ingot maker scrap seems to be in reasonable balance with producers being relatively busy.