Q2 / 2011
 
> WAXMAN INDUSTRIAL
> SCRAP CARES
 
  Scrap pricing remains stable through first quarter of 2011
  by Doug Malcolm
 
The increases in scrap pricing through Q4/10 ran out of steam during Q1/11, as scrap pricing stabilized during the quarter. This stabilization (with a slight decrease in February) held in the face of much global instability and rising energy costs. The instability in both the Middle East and Japan certainly allows for much economic volatility going forward. North American steel prices continue to climb, however additional steel making capacity coming online later this year may place downward pressure on these recent increases. Steel pricing in Europe, India, and China have not seen the same amount of increases. The Canadian steel market continues to perform above expectations, no doubt a result of our solid financial market and vibrant resource based economy.

Rising energy costs and the sluggish U.S. economy were certainly large factors tamping down North American economic growth throughout Q1/11. We feel that government and personal debt loads and the insatiable demand for energy, and the resultant price increase, will continue to put downward pressure on our fragile world economy. North American automotive demand has been a very important driver in our return from the recession of 2008-2009. The crisis in Japan and rising fuel prices will no doubt have a negative effect on this sector in the short term. Termination of government spending programs and a more responsible focus on balanced budgets may also slow down economic activity.

The Canadian scrap market has proven quite resilient in light of the uncertainty that has persisted during the first quarter. Canadian mill demand for scrap continues to be strong, due to solid order books. Scrap markets in the Middle East, particularly Turkey have softened due to the recent political turmoil. In the Far East, demand is also off, as the Chinese government struggles to curb inflation with a more restrictive fiscal policy.

Local prime scrap supply may continue to remain restricted, as Ontario manufacturing remains weak. The spring weather will stimulate demolition activity and the supply of obsolete scrap.

In summation, we feel that the scrap price stability will continue into Q2/11 with muted volatility, as the scrap market tries to assimilate both favourable economic conditions and uncertain long-term prospects.
 
 
  % change during previous quarter (first month to last month), Hamilton, Ontario consumer buying prices.
  SCRAP METAL COMMODITY TRENDS
 
No.1
BUSHELLING
-9.33%
 
No.1
CUT STRUCTURAL PLATE 5’ MAX
-9.01%
 
No.1
HEAVY MELT
-9.74%
 
No.1
BUNDLES
-10.84%
  % change during previous (first day of month to last day of month), LME 3 month sellers price.
  NON-FERROUS COMMODITY TRENDS
 
ALUMINUM
+6.3%
 
COPPER
-3.16%
 
NICKEL
+3.77%
 
ZINC
+5.95%
 
> LONDON METAL EXCHANGE
 
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waxmanreport@waxmanindustrial.ca