Copper Scrap Spreads Sink, Econ Woes Spur Deficit-Shanghai Metals Market

Hot Keywords

  • Zinc
  • Inventory data
  • Copper scrap
  • Rare earth
  • Lithium
  • Copper
  • Evening comments
  • Market commentary
  • Cobalt
  • Aluminium
  • SMM
  • Customs data
  • Silicon
  • MMi Iron Ore Port Index
  • Futures movement

Copper Scrap Spreads Sink, Econ Woes Spur Deficit

Industry News 10:20:05AM Jun 11, 2010 Source:SMM

NEW YORK June 10 (Reuters) - Copper scrap's discount to the New York-listed futures price has tightened sharply over the past two months as economic repercussions of the recession and seasonal factors exacerbated a shortage of the secondary material, dealers said.

"Given the slowness in the economy and the shortage of investment in housing as well as infrastructure capital goods, there has been less copper scrap available," said Matthew Heitmeier, director of non-ferrous metal marketing with Louis Padnos Iron & Metal Co.

Demand for copper wire, plumbing and tubing has suffered as the U.S. housing market struggles to get back on its feet and economically sensitive consumers hold on to their cars, dishwashers, or other big-ticket items a bit longer.

"There is certainly a low level of industrial demolition rates due to the economy," one Midwest trader said.

The imminent summer slowdown period, typically between July and August, was another factor for near-term demand prospects, dealers said.

"I am a bit concerned overall about demand because we are getting into the slow season for the brass mills, tube mills, brass and bronze ingot making, and nonferrous foundries," Padnos' Heitmeier said.

"Even though scrap is not readily available, I am not looking for demand to show any great improvement."

Bare bright, the highest grade of copper scrap, was now trading in a range of about 4 to 5 cents under the July futures contract HGN0 traded on the New York Mercantile Exchange's Comex division.

This compares with a discounted spread of about 10 to 11 cents in April, when the COMEX futures price peaked at a 20-month top at nearly $3.70 per lb.

Since then, the price has lost more than 25 percent of its value, as sovereign debt issues in the euro zone, tighter monetary policy in top-consumer China, and inconsistent data from the United States doused the industrial metal's near-term demand prospects.

As the futures price collapsed, so too did the secondary market prices.

No. 2 copper scrap spreads were now running at 35 to 40 cents under, compared with an April discount of around 45 cents, dealers said.

No. 1 Burnt was pegged at a 22- to 28-cent discount from around 30 cents.

CONSISTENT CHINA

Since their return from the Lunar New Year holiday in February, Chinese buyers have been fairly consistent in their purchases of copper scrap, dealers said.

"They have dabbled and bought here and there, but we have not seen widespread speculation," said one East Coast dealer.

Data issued on Thursday reflected that slower trend.

For the year, China's scrap imports are running at an average 334,000 tonnes, nearly unchanged from an average of 333,000 tonnes in 2009, but well below the monthly average of 465,000 tonnes in both 2007 and 2008.
 

Key Words:  copper Cu  copper scrap Cu 

Copper Scrap Spreads Sink, Econ Woes Spur Deficit

Industry News 10:20:05AM Jun 11, 2010 Source:SMM

NEW YORK June 10 (Reuters) - Copper scrap's discount to the New York-listed futures price has tightened sharply over the past two months as economic repercussions of the recession and seasonal factors exacerbated a shortage of the secondary material, dealers said.

"Given the slowness in the economy and the shortage of investment in housing as well as infrastructure capital goods, there has been less copper scrap available," said Matthew Heitmeier, director of non-ferrous metal marketing with Louis Padnos Iron & Metal Co.

Demand for copper wire, plumbing and tubing has suffered as the U.S. housing market struggles to get back on its feet and economically sensitive consumers hold on to their cars, dishwashers, or other big-ticket items a bit longer.

"There is certainly a low level of industrial demolition rates due to the economy," one Midwest trader said.

The imminent summer slowdown period, typically between July and August, was another factor for near-term demand prospects, dealers said.

"I am a bit concerned overall about demand because we are getting into the slow season for the brass mills, tube mills, brass and bronze ingot making, and nonferrous foundries," Padnos' Heitmeier said.

"Even though scrap is not readily available, I am not looking for demand to show any great improvement."

Bare bright, the highest grade of copper scrap, was now trading in a range of about 4 to 5 cents under the July futures contract HGN0 traded on the New York Mercantile Exchange's Comex division.

This compares with a discounted spread of about 10 to 11 cents in April, when the COMEX futures price peaked at a 20-month top at nearly $3.70 per lb.

Since then, the price has lost more than 25 percent of its value, as sovereign debt issues in the euro zone, tighter monetary policy in top-consumer China, and inconsistent data from the United States doused the industrial metal's near-term demand prospects.

As the futures price collapsed, so too did the secondary market prices.

No. 2 copper scrap spreads were now running at 35 to 40 cents under, compared with an April discount of around 45 cents, dealers said.

No. 1 Burnt was pegged at a 22- to 28-cent discount from around 30 cents.

CONSISTENT CHINA

Since their return from the Lunar New Year holiday in February, Chinese buyers have been fairly consistent in their purchases of copper scrap, dealers said.

"They have dabbled and bought here and there, but we have not seen widespread speculation," said one East Coast dealer.

Data issued on Thursday reflected that slower trend.

For the year, China's scrap imports are running at an average 334,000 tonnes, nearly unchanged from an average of 333,000 tonnes in 2009, but well below the monthly average of 465,000 tonnes in both 2007 and 2008.
 

Key Words:  copper Cu  copper scrap Cu