Week in Review: Steady prices, construction surge and global uncertainty

Market news and updates

• LME prices hold steady: The U.S. dollar eased up a bit after the jobs report, giving the LME aluminum 3 month price a bit of a lift. But overall, the market is still cautious, with uncertainty lingering around the recovery of economic activity, particularly in construction and manufacturing.
• Non-residential construction boom: Rising non-residential construction would point to more scrap metal demand, as well as potential for more next year.
• Balance of scrap market: RMU’s August’s survey showed a shift, with 57% now believing the scrap market is in balance, compared to 55% in July who thought otherwise.
• Copper export prices: Export prices for copper remained higher than domestic but falling demand from China is putting downward pressure on those export prices. This shift will play a ripple effect and eventually affect domestic scrap pricing.
• U.S. East Coast ferrous scrap exports: There’s been a small uptick in pricing in ferrous scrap exports, with HMS reaching $370/mt and shredded scrap hitting $390/mt. Export demand challenges also show weakness in China’s steel market and increased competition in rebar continue to pressure export demand, keeping prices flat for U.S. and European cargoes booked by Turkey.
• U.S. steel production: Weekly raw steel output fell by 2% year-to-date, signaling weaker demand. This could drive down scrap steel prices, with HMS prices possibly dropping to $285/gt.
• Inflation and trade deficit: A widening U.S. trade deficit and modest inflation increases might raise operating costs for scrap recyclers and hinder export opportunities.