US copper scrap spreads widen as futures move to year highs
Source: Platts
metalsplace.com
Copper scrap prices widened this week as futures prices surged to their highest point in the year and Chinese buyers moderated their activity. Trade sources complained scrap supplies were still extremely tight, but acknowledged that supplies of some grades could still be obtained.
One of those grades, No. 2 Birch/Cliff, has hovered around May COMEX minus 20 cents for several weeks, despite the supply tightness. Higher deals in the range of May COMEX minus 14-15 cents have been heard, but other sales were made in the range of May COMEX minus 22-27 cents.
Asked why No. 2 spreads were so wide, one dealer said, "Because there's only one buyer in the world. They're the ones that make the rules," he said, referring to China. "There's only one place to go in the world with scrap today. That's the problem."
The dealer said he saw spreads at May COMEX minus 20-25 cents. Other trade sources saw spreads even wider, with one trader saying he heard sales at May COMEX minus 22-27 cents. "They're keeping the spreads wide. I think they finally woke up to the fact that there's no business in the United States," he said.
But another dealer felt No. 2 spreads could range anywhere from May COMEX minus 16-25 cents. Though he couldn't explain the wide spread, the dealer agreed that it was highly unusual for No. 2 Birch/Cliff. The Platts spread for No. 2 widened to May COMEX minus 20 cents from May COMEX minus 15 cents.
Spreads for No. 1 burnt wire also widened due to rising futures prices and moderating demand from overseas customers. But sources agreed that domestic mills were in the market for No. 1.
The Platts spread for No. 1 burnt wire widened to May COMEX minus 8 cents from May COMEX minus 5 cents. Spreads heard for No. 1 also varied considerably, with export spreads wider and domestic spreads tighter.
"Export spreads are definitely wider than domestic," said one dealer. "I would put domestic around [May COMEX minus] 3-8 cents, but exports probably in the [May COMEX minus] 8-12 cents range."
But one dealer felt the market balance had shifted towards domestic consumers. "A lot of it [No. 1] is staying in the States now, if you can get it," he said, citing sales at May COMEX minus 6-8 cents.
Another agreed, citing spreads of May COMEX minus 5-12 cents to account for the discrepancy. "The domestic consumers have gotten a little bit more aggressive. On the other, it's buying in the Far East that's pushed the market," he said.
The Platts spread for bare bright widened slightly to May COMEX plus 1 cents from May COMEX plus 2 cents. But trade sources reported continued strong demand from domestic mills.
"Domestic spreads are stronger there as well. There's a lot of demand; domestically, it seems a lot of the mills are pretty hungry for material," he said, putting the spread at May COMEX minus 4 cents to plus 1 cents.
Another dealer put the spread at May COMEX plus 1-2 cents, depending on delivery location and who was buying. "Supplies are tight right now," he said. Other domestic sales were heard from May COMEX level to 2 cents over. |
