Busy signals.

Earlier in 2003, when forecasters at events such as the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables, were predicting upcoming supply deficits for metals, it would have been difficult for manufacturers in North America and Europe to understand why.

For the past couple of years, while China was building up its metals industries, producers and consumers of metals in North America and Europe were wondering if domestic orders would ever return. Perhaps one or two months is too short of a time from which to draw conclusions, but it looks like such a return is finally underway.

Manufacturers index numbers for November are pointing toward more activity in North America, and it could be coming at just the right time.

Even if China's economy remains strong into 2004, one export broker notes that December and January figure to be seasonally very slow months. In December, Chinese metals businesses will likely purchase fewer raw materials as they are asked to clear their lines of credit so Chinese banks can close out their 2003 books.

This reduced activity is soon followed by the Chinese New Year holiday, which comes early this year, on Jan. 20. Many industrial plants curtail activity for several business days both leading up to and after this holiday, the most widely celebrated in China, with long vacations traditionally taken.

A respite in buying by brokers representing Chinese foundries and smelters would probably be welcome by domestic consumers of copper and aluminum scrap. As Chinese demand has increased while domestic supply was scarce, most U.S. consumers found themselves paying high-end prices at a time when their own ability to raise prices was tethered by the sagging domestic economy.

Whether a temporary slowdown in overseas buying is enough to bring scrap prices down remains to be seen, but those lamenting the tight market (in red metals in particular) would welcome a more bountiful supply picture.

Metals producers who can raise the prices of their products are doing so. The ATI Allvac division of Allegheny Technologies Inc. recently announced increased prices "due to dramatic increases and continued volatility in costs for raw materials, such as nickel, cobalt, molybdenum and alloy scrap." The specialty metals producer has reportedly raised its prices for all nickel, cobalt and specialty steel alloys.

And similar to what steelmakers have done because of historically high ferrous scrap prices, ATI Allvac is including a "monthly raw material index" to be added at time of shipment. The index will be calculated monthly based upon the prior month's average raw material prices, according to the company.

Allvac produces high performance nickel-, iron-, cobalt- and titanium-base metals for the aerospace, marine, oil and gas, chemical processing, biomedical, transportation and nuclear industries.

In the aluminum sector, Kaiser Aluminum Corp., Houston, has announced it is raising prices on its flat-rolled sheet and plate products because of rising costs of raw materials and other items.

Kaiser, which is working its way through Chapter 11 bankruptcy, says prices for all 6000-series products will rise by 10 cents per pound, and prices for all 2000-series and 7000-series products will go up by 5 percent.

There is no word on whether the current climate will cause the company to consider re-starting its Mead, Wash., smelter.

Average U.S. refiners Buying
Prices for No.2 Copper Scrap

Nov02                         60.50 cents
Dec                           61.33 cents
Jan03                         62.38 cents
Feb                           64.11 cents
Mar                           64.26 cents
April                         61.80 cents
May                           65.43 cents
June                          67.36 cents
July                          68.23 cents
Aug                           69.43 cents
September                     72.67 cents
Oct                           77.85 cents
Nov                           82.81 cents

Source: American Metal market (cents per pound)

Note: Table made from bar graph.