As I was thinking about the subject line – copper and tariffs – I realized that the word tariff has come up more in more in my conversations with colleagues about scrap over the past few months. This 6 letter word is quickly replacing many 4 letter words that I use….
All kidding aside, for many of you receiving this e-mail, scrap copper is a major part of your scrap metal programs – if not is volume at least in value. So I wanted to take a moment to share with you what is transpiring in the copper world.
Over the past few years, as some of you may be aware, China, the main driver for most commodities, has been trying to reform their economy and control their pollution. As part of this effort, the government has been making the importation of lower grade materials more challenging to prohibitive. Perhaps since the Olympics in Beijing 10 years back, there have been various curbs from increased duties on items, increased inspections on materials coming into the country to more recently, deeming certain scrap materials, such as low grade coppers (including insulated wire) as ‘waste’ and aiming to prohibit the general importation of these items by 2020.
This past week, China has decided to respond the recent round of US tariffs by applying a 25% tariff on the importation of copper scrap from the US. As this AMM article more eloquently communicates, this will now effectively stop all meaningful trade of copper scraps between the US to China, leaving more material in the domestic market. When I dusted off my old economics 101 book, increased supply to a market that is in ‘equilibrium’ will cause the price to decline if new demand to make up for the new supply isn’t found. Based on my export consumers, they are laying the foundation for new Asian markets, but there is no real alternative market to the Chinese market at this point. So unless mining slows down or another home for this scrap opens up, there will be a potential bottleneck coming our way of scrap copper.
This doesn’t mean a collapse in the price of copper – though we may experience some additional volatility in the LME/COMEX pricing and I would suspect a gradual decline in pricing. However, this is a globally traded commodity, like oil, and as our world economy appears to be chugging, like oil, copper is an integral ingredient to the world economy. They don’t call it Dr. Copper for nothing.
As always, if you have any questions or want to discuss ‘scrap’, give me a shout or an e-mail.
Ami Tsarfati at 8:08 AM
Hedging Our Bets
Friday, June 22, 2018
The roller coaster we call the scrap metal market continues to live up to its reputation of being unpredictable to say the least. Whether it is tariffs, NAFTA, interest rates, international trade issues or simply a strike at a copper mine in Chile, these global events are having a major impact on our metal markets – both ferrous and non-ferrous. Its important that you can work with a partner that can educate you about the markets and give you the tools to help make the best decisions for your company’s recycling needs. Joseph & Company is this type of company to partner with you.
We believe that working with a recycler doesn’t need to a zero-sum game with one party winning at the other party’s expense. Our unique approach to marketing your scrap material means that we will be a partner in ensuring we are marketing your scrap for the best prices and we have the tools to ensure that your getting consistent value, especially in volatile markets.
If you’re a generator of scrap and would like to learn more about our approach to recycling and marketing your scrap metal, give us a call and find out why we are the region’s recycler of choice.
Ami Tsarfati at 4:25 PM
What the Trump is Going On?
Friday, June 1, 2018
So I dusted off my old economics text books from my days at McMaster to find out what a tariff is and what this means to our scrap metal industry. Needless to say, beyond the basic definition of ‘tax’ and the resulting ‘trade wars’ that these decisions generally make, I didn’t come away with a text book answer of what to expect in the upcoming weeks and months.
This climate is new territory for many of us and I do not think that our consumers (mills) have an answer for what this means on their business climate. Quite frankly, I do not think that industry expected ‘Section 232’ to result in Canadian/US tariffs. What we do know, is that at 12:01 on June 1, tariffs of 25% on steel and 10% aluminum imports took effect.
We are expecting this summer to be a roller coaster as our mills and our suppliers find out how these tariffs will be affecting their business. We will be keeping our fingers on the pulse and ensure that we are able to get the best markets for your scrap material – regardless of what is going on in the market place.
If you have any questions, don’t hesitate to reach out!
Ami Tsarfati at 12:31 PM
Stainless Steel Market update May 2018
Tuesday, May 8, 2018
With spring and comes change and it appears that change, or at least a shift, in the metals market is underway.
Nickel and chromed based scrap materials are starting to face headwinds that defy the LME and business fundamental – and seem to be more based on trade wars.
I would suggest that this will likely be played out with other base metals as well as the tariff negotiations between the USA and the world play out.
In short, we are beginning to feel a slight chill in the pricing in the past few days as compared to a few weeks ago, as this AMM article is suggesting. Nothing to cause anyone to jump out of a window, but certainly, history has shown me that trends are your friend and if the pendulum swings a new direction, it may overshoot until it finds its new balance.
We will keep on eye on the market and ensure that we are able to get strong pricing for your scrap material. However, as we see market changes, we like to keep our suppliers and friends in loop.
What a difference a week makes – last week we were experience mid-winter weather and based on my phone’s weather app, we may be breaking 20 degrees next week!
With spring comes the eventual market pricing ‘corrections’ in the ferrous world. Based on the headline in today’s American Metal Market, May looks to be a softer month for steel pricing. Although the article references US based mills, what happens south of the border influences what happens here.
Per American Metal Market's article, we are now anticipating an adjustment of $10 - $25 on most ferrous prices for May. This still means that ferrous pricing is exceptionally strong – however, if you are using numbers for quoting purposes, I would suggest that you make some adjustments for next month downward.
Naturally, if you have any questions on the market, please reach out. We likely will not get firm numbers until the second week of May, but we will get better guidance from our consumers over the next week or so.
If you are looking to set up a recycling program or need some more information, don't hesitate to give us a call! We are here to help you!
Enjoy the weekend and the summer weather next week.