Last week nickel and alloy prices increased, as did aluminium, following rises in primary non-ferrous metals on the LME. But raw material prices are making merchants cautious.
According to the latest non-ferrous metals report from the Bureau of International Recycling (BIR), erratic variations in LME quotations are not allowing members to go about their business calmly.
Divisional president Marc Natan reports: LME stocks of aluminium have fallen by almost 800,000 tonnes in the space of a few months, the nickel inventory has rarely been so low and copper will shortly drop below the 100,000 tonnes mark. Of the seven metals quoted on the LME, five of them are currently experiencing a backwardation the cash price is higher than the three-month level. This position is expected to develop further given the extent of decline in stocks.
For the UK, China remains the main issue. Michael Oppenheimer, managing director of Mountstar Metal Corporation, reports that Chinas withdrawal from the market could still be problematic for the industry, but supply issues should turn around soon. Our forecast would favour strengthening prices as China starts to devour its stocks and needs to compete with Indian buyers once more.
The situation in the US is stable, according to the BIR report. But, It would appear that this summers activities might be more leisurely than we would like, says BIR non-ferrous division senior vice-president Robert Stein.
Changing market conditions have led research firm Market and Business Development to revise its predictions for 2008.
The UK Metal Recycling Market Development June report states that the UK market for metal recycling will decline by 1% and 2% in 2004 and 2005 respectively, but moderate growth is anticipated up until 2008, when the market is estimated to be about £1.5 billion, representing growth of 1% compared with 2004.
These figures have been revised downwards from Aprils report, which states that the market will be worth £1.7bn by 2008 a £2 million revision.
Research now predicts moderate growth for the aluminium market. It is expected to rise by 2% in between 2004 and 2008 to £847.3m. Demand for nickel scrap is predicted to increase by 5% from £159.3m this year to £167.6m in 2008. And despite annual fluctuations, the secondary zinc sector is predicted to drop by 1%.
Market and Business Development also revised the value of ferrous metals within the market from its earlier predictions. It says that the value of the iron and steel waste and scrap sector is expected to remain relatively constrained due to oversupply in the market as well as increasing competition from China and Russia.
Between 2004 and 2008 the market is forecast to decline by 1% to £323.2m. This forecast has been only slightly changed from its April report when it was predicted that the 2008 market value would increase to £367.9m.
However, whatever happens between now and 2008, one thing is certain, demand from China and Russia will play an important part in future growth. Chinas hunger has been credited for the huge rise in prices earlier this year. Builders have reported that nail prices have increased by 30% this year; while Chinas dominance will push Australias export earnings up by 14% next year.
And everyone seems to understand the value of scrap, leading to some daring burglaries. Last month a lorry was stolen from outside the ThyssenKrupp premises in Cradley Heath after the driver was enticed out of the cab by someone saying there was a problem at the rear of the vehicle. Once he got out the vehicle was driven away and 11 tonnes of aluminium sheet were stolen. u