n° 173 – July 2021

The USA is seeing a resurgence of COVID’s Delta variant in regions where vaccination rates are very low. The variants are affecting southern regions of the USA and are hitting younger people very hard. Infection rates have risen nearly 50% in the last week. Some areas are back to having hospitals at full capacity, with ventilators in tight supply. 

The federal government is considering sending healthcare workers door to door to increase vaccination take-up but this is meeting with resistance at local level. Vaccinations have become politicized, which is keeping rates low in certain regions; this is despite the fact that unvaccinated people account for 99% of all COVID-related deaths in the USA - a stunning reflection of the effectiveness of the vaccines.  

The federal government is still negotiating an infrastructure bill, with two steps forward and one step back. It seems likely that something will be passed as both the Democrats and the Republicans agree on the need; they are just working out the details of the package.  

Owing to continued supply chain, employment and commodity price issues, there are concerns about whether inflation will rear its head again. The June inflation reading came out at a surprising 0.9% and the rate for the last 12 months is a 13-year high of 5.4%. In visits to consumers and suppliers, a consistent theme is that manufacturers could do more if they could only hire more employees. Labour costs continue to rise and manpower is in very tight supply. 

The all-in US primary aluminium price is at historically high levels. The regional premium is at an all-time high above US$ 660 per tonne and is expected to continue its rise. Certain types of mill grade and profile scrap have maintained a tight spread to the primary price, with other lesser grades starting to widen out as delivery appointments are out several months. Aluminium markets do not seem to be concerned about the Chinese efforts to temper commodity prices, while Russian export taxes are likely to keep prices and premiums elevated around the globe. Secondary ingot prices are at 10-year highs but business is spotty as North America is still suffering from slowdowns and outages owing to labour shortages and continued chip supply issues. While secondary ingot prices are stable, scrap prices are dropping and it is becoming difficult to place secondary metal as supply is abundant  

Copper and brasses appear to be in tight supply. Spreads for all grades of copper have been tightening, with domestic and export demand improving.

It has been encouraging to hear the stream of expansion announcements around the recycling industry in the USA: Wieland, Hydro and Matalco have all announced new plant openings in the last two months. It is good to see our industry continuing to grow to meet ongoing recycled content raw material needs. 

Export activity is still complicated by continued vessel and trucking shortages. COVID-related lockdowns are affecting export markets in South East Asia while cash-flow issues are reported among some offshore consumers. While secondary aluminium prices seem to be stable, the copper cable business is difficult owing to import restrictions in many consuming countries.