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  • NonFerrous Beat

Nonferrous Market Update

Wide scrap spreads, China’s scrap import restrictions, transportation bottlenecks, and fluctuating foreign exchange rates were all topics of intense interest for nonferrous market participants at the start of 2018, even as the major economies have entered a period of synchronized economic growth.

Renewed equity market volatility and rising bond yields can now be added to that list of concerns. During February 5-8, the Dow Jones Industrial Average lost more than 1,205 points to close at the lowest level since last November. As stocks sold off amid rising concerns about inflation, copper prices also came under pressure. At the COMEX in New York, most actively traded copper for March delivery traded in a 14 cent range in just one day of trading (February 7) and lost ground from there. After having started the year at $3.28 per pound, COMEX copper was down to around $3.04/lb. by February 9.

It was a similar story at the London Metal Exchange as LME 3-mo. copper declined more than 5 percent for the year-to-date through early February, the worst performance among the major base metals. And while LME 3-mo. aluminum had the second largest price drop through early February (-4.8%), the on-going truck shortage contributed to rising physical market premiums, with Metal Bulletin recently reporting the US Midwest premium was up 38% for the year-to-date to at 12.75-13.25 cents/lb. The 232 aluminum investigation and trade cases on aluminum foil and common alloy sheet have also been seen as supportive for domestic aluminum demand. As for metal prices at the exchanges, tin and nickel have had the best performance so far this year. After having traded as high as $14,030/mt in early February, LME 3-mo. nickel prices have recently softened but are still up more than 5 percent for the year-to-date amid reports of solid global demand:


Global copper demand is expected to outstrip global supply again this year, with the International Copper Study Group projecting a global market deficit of 104,000 metric tons in 2018. But reduced concerns about copper supply disruptions as labor contract talks got off to a positive start this year in addition to rising LME copper stocks have recently weighed on market sentiment. Since the end of 2017, closing copper stocks in LME warehouses increased by more than 135,000 metric tons through February 8, continuing the cyclical movements in copper stocks that we have seen recently: 

Despite recently softer copper and commodity prices, Goldman Sachs remains quite bullish thanks in part to expectations for healthy global economic growth. On February 1, the bank raised its 12-mo. copper price forecast to $8,000 per metric ton, up from its previous forecast of $7,050/mt. Whether scrap prices can keep up with primary metal prices in 2018 in light China’s import restrictions is the more pressing question for scrap recyclers this year.

Nonferrous Beat

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