Ferrous, Non-Ferrous And Scrap Price Outlook: Not So Hot?

In the wake of recent news that eight of MetalMiner’s 10 monthly metal price indexes dropped to all-time-lows, we thought we’d reflect on what our friend Bob Garino of Export Tax Advisors, and former director of commodities with the Institute of Scrap Recycling Industries (ISRI), had to say on ferrous and non-ferrous metal trends.

Metal Price Trends
Writing in a weekly newsletter, Garino’s take on June prices reflects our tanking Monthly MMIs:

“June…not good, boys and girls…especially the second half for the base metals complex as well as precious metals and equities. We’ll not beat this dead horse but see what July has to offer as we start the third quarter,” Garino writes.

We at MetalMiner generally agree, as we have a hard time seeing tremendous sustainable support in sectors such as steel, stainless steel/nickel and grain-oriented electrical steel (GOES).

Economic Indicators for Metal Buyers
This week will be far more telling with the release of retail sales, industrial production, consumer inflation, and the latest on housing (housing starts and permits), Garino reminds us. We’d especially keep an eye on industrial production, as capacity utilization rates lately have been underperforming.

On a Scrap Price Outlook:
“The story we’ve heard from base metal scrap processors this first half on 2013 is one of struggling with low margins and perhaps more troubling, low volumes — and not unlike what we’ve heard from the ferrous side…and as long as the manufacturing sector continues its flat line trajectory, there’s little evidence to suggest margins or volumes will significantly improve,” Garino posits.

Keep an eye on scrap price movement, especially on the ferrous side, for signs as to where steel prices will be heading. Recent numbers suggest firmer prices this month, and higher flat-rolled prices indicate more upside for all grades of scrap next month, according to Garino.

We have also noted increased volatility in local Chinese prices for copper and aluminum scrap over the past several weeks, which could be interesting for scrap buyers or sellers. Copper prices in general have underperformed, and with LME stocks at all-time highs.

by Taras Berezowsky