Hot winter.

Temperatures may have cooled throughout much of the U.S. in early 2004, but metals pricing trends have remained heated.

Copper on the Comex and LME markets in particular climbed to dizzying heights in January and early February, reaching $1.20-per-pound pricing toward mid-February. Although not as volatile, aluminum also remained at prices considered attractive enough to keep scrap flowing from generators to processors to consumers.

A broker serving consumers in China confirmed financial press reports that buyers in China are beginning to pull back from paying steep prices for North American red metal scrap. "Some buyers have pulled back, especially in the past couple of days," the buyer remarked in the third week of February.

It is unclear whether metals producers in China are finally cutting back production after several years of unfettered growth, or whether the pullbacks are temporary and being done in the hopes of creating some downward pricing conditions.

China continues to be the focus for those attempting to figure out the demand scenario for copper. While the Chinese government has issued intermittent pronouncements noting that its metals industry may be adding capacity faster than can be justified, at the same time entrepreneurs continue to enter the metals industry.

Provincial governors, as well, are promoting new industrial ventures to serve a national economy growing at an unprecedented scale.

In January, the governors of three northeastern Chinese provinces announced a "range of financial measures to strive for the region's business revitalization."

According to the Beijing-based China Daily, the governors are hoping to move their region's economy away from state-owned enterprises, which have given it a "rust belt" feel, and move it toward encouraging preferential policies for private and export-oriented enterprises.

In the face of such active business promotion, it seems reasonable to wonder whether Chinese demand for scrap metals will genuinely begin to decline or if it is just taking a slight pause.

Domestically, any uptick in the aluminum market comes too late for Ormet Corp., Wheeling, W. Va, as the aluminum producer has cited the difficult conditions of the "past four years" as the reason for filing for Chapter 11 bankruptcy in February.

One of America's major consumers of nonferrous scrap, Imco Recycling, Irving, Texas, reports that it continues to see more activity at its overseas operations compared to its U.S. facilities. For the fourth quarter of 2003, the company reported a 7 percent decrease in the combined amount of material processed at its U.S. aluminum recycling and specialty alloys plants.

On a brighter note, Hydro Aluminum North America has announced plans to invest $8.3 million to upgrade its casting facility for primary-quality aluminum billet in St. Augustine, Fla. The investment will double the facility's capacity to 60,000 metric tons per year. The U.S. subsidiary of the Norwegian metals producer says the project is part of the company's $100 million plan to build new or revamped aluminum remelt capacity in the U.S.

The St. Augustine upgrades will allow the plant to recycle larger volumes of aluminum, while still providing primary-quality aluminum billet to extrusion plants such as its own Rockledge, Fla., plant, according to the company.

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

Jan03           62.38 cents
Feb             64.11 cents
Mar             64.26 cents
Apr             61.80 cents
May             65.43 cents
June            67.36 cents
July            68.23 cents
Aug             69.43 cents
Sept            72.67 cents
Oct             77.85 cents
Nov             82.81 cents
Dec             89.69 cents
Jan04           98.38 cents

Source: American Metal Market (cents per pound)

Note: Table made from bar graph.