Chasing al.

Aluminum scrap consumers are starting to experience the feeling of coming up empty while sourcing scrap--something consumers of other scrap materials competing with Chinese buyers have grown familiar with over the past couple of years.

The only difference thus far is that the scarcity of scrap hasn't led to the bidding up of prices seen in some other scrap materials (copper and ferrous scrap, most notably).

But the other earmarks of overseas competition are in place, including a change in long-standing flow patterns from dealers and generators to brokers and consumers.

Pricing levels are not likely to match scarcity rates as long as primary aluminum makers can continue to keep up with global demand. Many producers of secondary aluminum remain flexible enough to switch to primary materials if pricing and availability scenarios call for it.

Those who are most squeezed are consumers who predicate their businesses on using scrap material. They are in the unfortunate position of bidding against overseas buyers taking advantage of a weak U.S. dollar and an overall lower cost structure (especially cheap labor and fewer environmental expenditures.) Meanwhile, these U.S. scrap consumers are unable to pass along any resulting price increases to most of their customers, who in many cases can shop for primary material if they need to.

Unfortunately for aluminum recyclers, static prices offer little incentive to draw out additional aluminum scrap.

(Additional news about nonferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)