Volatility everywhere – Recycling Today

Russia’s invasion of Ukraine on February 24 led to volatility in non-ferrous metals markets, particularly for nickel. The London Metal Exchange suspended trading in the metal from March 8 to 15, with LME CEO Matthew Chamberlain citing “unprecedented further overnight increases in the price of nickel over three months” for the decision.

Nickel rose from $48,078 per metric ton on March 7 to over $100,000 per metric ton on March 8 because China’s Tsingsang Group decided to cut its short position of nearly 100,000 metric tons of the metal in a few hours, depending Davis indexwho cites suggestions in the media.

On March 15, when the LME announced that its nickel contracts would resume at 8 a.m. London time on March 16, it also said it would apply daily upper and lower price limits of 8%, which it increased to 12% on March 17, to those contracts as well as to “all firm contracts in all base metals”. It also postponed delivery to March 23 for all nickel contracts entered into before March 16.

For other base metals contracts, which included aluminum and copper, the LME set a daily upper and lower limit of 15%.

Copper and aluminum also hit new highs when trading on the LME on March 8. According to Agence France-Presse (AFP), aluminum reached $4,026 per metric ton ($1.83 per pound), which marked “the first time the light metal crossed $4,000”. According to AFP, copper also hit a new high, hitting $10,845 per metric ton ($4.92 per pound).

In the US copper scrap industry, Brian Shine, CEO of Manitoba SocietyLancaster, New York, says, “It’s interesting because in some ways there’s nothing going on and in other ways there’s a lot going on.

Wild market swings don’t produce the kinds of responses they normally would, he adds. “Surprisingly, when we see the big increases in the market, we’re not being offered a lot of metal,” Shine says. “That’s normally what happens.” Nor do consuming customers demand more metal when the price drops. “We don’t see these market-driven responses in supply and demand,” he says. “When people need metal, they call you whether the market is bullish or bearish.”

Historically, says Shine, a movement of a penny or two up or down compelled sellers and buyers of scrap metal to act. But, over the past six to eight months, he says, 10-cent moves aren’t driving action. Instead, he says he thinks consumers react to their volume of business, while yards shift their loads once they’re built for cash flow and market reasons.

Despite the current uncertainty introduced by the war in Ukraine, Shine says sentiment in the copper market remains optimistic given infrastructure investments and new opportunities created by increased production of electric vehicles and the transition to green energy. Moreover, he says the situation adds momentum to a trend that emerged earlier in the manufacturing relocation pandemic. “Some of our customers or customers of our customers have seen an improvement in orders in North America because they can’t get the metal out of Russia.”

Currently, however, Shine says scrap generation still hasn’t returned to pre-COVID levels, and scrap processors are seeing increased transportation and labor costs, he says, affecting margins.

Chad Kripke, president of the Toledo, Ohio-based brokerage firm Kripke Enterprises Inc., indicates that the supply of aluminum is limited, as a shortfall has been forecast in LME stocks for the year. It could tighten if European smelters were to cut output due to energy problems, which have been made even more pronounced by sanctions on Russian oil and natural gas. “It is legitimate for prices to remain at this level or higher, especially as smelter capacity constraints persist.”

Kripke adds, “The extreme volatility in the primary aluminum traded price has led to a wide price range for items that track the LME. Prices and differentials for the same items are all over the place as buyers try to re-establish appropriate values ​​for these scrap grades.