Q1 / 2011
 
> WAXMAN INDUSTRIAL
> SCRAP CARES
 
  Scrap pricing trends upward as 2010 comes to a close
  by Doug Malcolm
 
The fourth quarter of 2010 resulted in a gradual strengthening of demand for steel in North America. This strengthening, kick started at the end of the summer, a result of buoyant automotive demand and increased consumer spending. This spending was most likely brought about by improved employment numbers, and a stable low interest rate environment. As Canada and the United States continue to spend their way out of recession and adhere to a low central bank rate policy, we feel that the outlook for continued short term economic improvement looks favourable.

During the later half of Q4/10, scrap markets in North America benefited from this increased steel demand and coupled with historically low inventory levels, prices rebounded substantially. Overseas scrap markets, particularly Turkey and the Far East showed a vibrant return to the market in the fourth quarter of last year. This in turn nicely supported the rise in North American scrap pricing. Central European scrap markets continue to show weakness, a result of the economic fragility in the Euro zone.

A strengthening Canadian dollar against the U.S. dollar has had a slight dampening effect on increases in scrap prices on this side of the border. Steel making input costs will continue to increase, fuelled by continuing strong demand from China. A weaker U.S. dollar should stimulate exports from that country, which in turn bodes well for all North American steel producers.

Local prime scrap supply remains restricted, as Ontario manufacturing continues to contract in the face of a struggling economy and a strengthening Canadian dollar. Obsolete scrap is scare as well, a result of soft demolition activity due to seasonal factors. Inclement weather throughout parts of North America this winter has had an adverse effect on scrap supply.

Rising energy prices and their dragging effect on the economy is troubling as we move forward in North America. As well, the continued under performance of the U.S. economy is cause for concern.

In summation, we feel that the upward trend in Canadian scrap pricing should continue through February with sustainability of this scrap demand into Q2/11 a question mark.
 
 
  % change during previous quarter (first month to last month), Hamilton, Ontario consumer buying prices.
  SCRAP METAL COMMODITY TRENDS
 
No.1
BUSHELLING
+19.93%
 
No.1
CUT STRUCTURAL PLATE 5’ MAX
+28.00%
 
No.1
HEAVY MELT
+31.50%
 
No.1
BUNDLES
+24.66%
  % change during previous (first day of month to last day of month), LME 3 month sellers price.
  NON-FERROUS COMMODITY TRENDS
 
ALUMINUM
+3.62%
 
COPPER
+17.01%
 
NICKEL
+1.55%
 
ZINC
+9.31%
 
> LONDON METAL EXCHANGE
 
4350 Harvester Road Burlington, ON L7L 5S4
TEL 905 639 1111 / TOLL FREE 1 866 294 1699
waxmanreport@waxmanindustrial.ca