Dramatic improvements have been seen in COVID infection and fatality numbers over the last couple of months. Vaccine availability is improving, with the hope that all citizens will be eligible for their first jab beginning in May - far ahead of schedule. Vaccination levels are currently above 20%.
Democrats control both legislative branches of the government and so they will have an easier time passing legislation. A COVID relief bill has been passed along party lines and will distribute US$ 1.9 trillion in various types of relief aid and financial stimulus. Like previous programmes, there will be up to US$ 1400 in payments to individuals at a certain income level. There is also targeted relief to state and local governments, rental and housing assistance, and more small business relief through the PPP programme, as well as funding for education and transportation which would include some airline relief. It is a very large programme and affects many sectors of the economy.
Expectations are of massive GDP growth in the USA this year; Morgan Stanley has projected growth of 8% for 2021. Manufacturing activity remains very good, with many factories still struggling with labour shortages. The unemployment rate has dropped to 6.2%. This is Spring break time and the travel industry is seeing a very nice rebound with COVID illness levels having dropped and with vaccination rates on the rise.
Metal terminal pricing is running at multi-year highs. In “normal” times, higher terminal markets see wider spreads for scrap, as is the case with copper. However, we are seeing something very different with aluminium scrap: as prices have risen, spreads have remained very tight, and some alloys have tightened even more. Many mills are now talking about whether scrap is worth the cost relative to primary aluminium, but availability of all aluminium units is scarce and so the conversation does not go very far. Mills are taking any units they can get. All-in primary aluminium pricing has skyrocketed in recent weeks, marching well above secondary ingot pricing. Because of ongoing supply shortages and no movement on import tariffs, regional premiums have jumped US$ 90 per tonne since the previous Mirror report. All-in aluminium primary pricing is almost 15% higher than two months ago.
While primary prices have risen, scrap discounts have tightened or remained the same on wrought alloys. Secondary scrap supply is also tight, but there are more auto manufacturers struggling with supply chain issues that will likely slow production. There are only sporadic slowdowns at the ingot-makers and no let-up in pricing pressure.
Copper spreads have widened on most grades as the markets have risen to 10-year highs. There seems to be plenty of supply on copper, although there are some small shortages of certain brass ingot-makers scrap. Exporting metal is still a train wreck, with a lack of containers and trucking shortages causing major headaches.
Shapiro Metals (USA), Board Member of the BIR Non-Ferrous Metals Division