The coronavirus’s (COVID-19) impact hit markets on Monday morning as Italy put part of the country on lockdown because of the virus’s spread. The Dow Industrials and NASDAQ plummeted more than three percent by mid-morning and international indexes fell sharply too.
The Hang Seng closed 1,8% lower on Monday, the Korean Stock Exchange closed down nearly 4%, and stocks in Italy were down around 6% by the end of their trading day on Monday. Uncertainty surrounding the spread of COVID-19 continues to add volatility to markets worldwide. As investors turned to “safe-havens” in anticipation of further declines, gold futures in New York surged as high as $1,692 per troy ounce on Monday, while silver futures approached $19/to. But crude oil and base metal prices have not fared well, with COMEX copper futures trading as low as $2.5585/lb. on Monday while NYMEX crude oil futures were testing support around $50 per barrel. For comparison’s sake, crude oil futures were trading near $65/bbl earlier in the year.
For U.S. scrap dealers, the fall in primary nonferrous metal prices only compounds the challenges presented by the shifting global landscape for scrap metal. As we presented at the ISRI Board of Directors meeting in Nashville last week, while the overall volume of U.S. nonferrous scrap metal exports was little changed in 2019, the composition of the scrap trade flows has changed dramatically. In 2016, U.S. nonferrous scrap exports (including copper, aluminum, nickel, lead, and zinc scrap) to China totaled more than 1.36 million tons, while shipments to the rest of the world were nearly 1.1 million tons. Fast forward to 2019 and the balance has shifted to about 400,000 tons to mainland China and nearly 2.5 million tons to the rest of the world:
And for those of you who may have missed our ferrous webinar with Sean Barry yesterday (please contact JLevy@isri.org for info about how to access the recording of the webinar), here’s a slide that pretty clearly illustrates the disconnect between scrap and steel mill prices in recent years: