Source: International Copper Study Group

Nonferrous recyclers assessing the scrap market in mid-October are predicting the fourth quarter of 2016 will follow the same pattern as the earlier parts of the year, with prices neither plummeting nor zooming upward but instead bumping along in a relatively narrow range.

Regarding supply and demand on the red metals side, Stefan-Georg Fuchs, executive director, recycling materials, with Germany-based copper producer Aurubis, says “autumn markets have been fair to us so far, and we shouldn’t see a significant shortage over and above of what we already experienced in 2016 so far.”

Fuchs characterises the copper price swings that have taken place throughout 2016 as “short-term volatility [that is] too short in its swings to have any significant impact on buying activities in the markets.”

He continues, “I suppose most merchants (on the sell side) play the longer outlook and either keep metals in store as long as possible until the next price hike or (on the buy side) try to buy on the low side when some participants have to sell.

The low price of steel and ferrous scrap remains part of the narrative for nonferrous scrap recyclers as well, Fuchs comments. “We have a cautious eye on steel, as the steel markets tell the recycling markets where to go. If steel goes bad, most other metals do the same, and the collection of [all] scrap will dwindle.”

* In thousands of tonnes; Source: International Copper Study Group

Fuchs points to currency volatility as one wild card in what otherwise should be a fourth quarter similar to the previous three. “We think the current situation might prevail for the remainder of 2016 and well into 2017 unless we see major moves in the U.S. dollar to Chinese RMB (renminbi) value or the U.S. dollar to the euro value, which of course affects red metals prices.”

As they prepared to gather for the Bureau of International Recycling (BIR) World Recycling Convention (Round-Table Sessions) in Amsterdam in late October, members of the BIR Non-Ferrous Division board pointed to mixed signals affecting scrap prices in their write-ups for the World Mirror: Non-Ferrous Metals.

From his perspective with TAV Holdings in the United States, Andy Wahl points to rising London Metal Exchange (LME) prices for primary aluminium (11.8%), nickel (22.3%), lead (20.5%) and zinc (32.3%) while scrap prices in the U.S. languish.

“The million-dollar question is why these gains bear no relation to the pricing and activity levels for our recycled metals,” writes Wahl. “The secondary aluminium market [in the U.S.] is still looking for the bottom as twitch and ingot prices seem to fall hand in hand. Interestingly, twitch in Europe is now worth a little more than in the U.S.—something I have not seen in years. So maybe supply and demand still do have a function.”

Like Fuchs, Wahl sees a tie-in to low pricing on the ferrous side. “The latest drop in ferrous scrap prices to the levels seen at this time in 2015 will not help encourage more nonferrous metals into yards,” he writes.