Mix and match.

China's rapid growth in the metals industry has changed the scrap industry in many ways, but one of the most widespread has been on the nonferrous exporting side.

In particular, scrap processors continue to have a tough time justifying their old sorting methods in a market where Chinese buyers pay above market pricing for mixed, largely unsorted nonferrous metals grades.

The strength of the Chinese metals sector has created an awkward situation within the nonferrous sector in North America. If one were to ask most U.S.-based aluminum and copper producers (and even aluminum and copper/brass products makers) if these were prosperous times, few positive responses would be heard.

And yet, global commodity exchange pricing for most nonferrous metals is trending upward, with nonferrous scrap prices following the trend.

Currently, nonferrous scrap dealers are hearing encouraging words and dealing in comfortable margins with buyers representing Asian smelters and foundries. At the same time, many of their domestic buyers are singing the blues and pressing for a thinner spread to help them make ends meet.

Some observers wonder whether the more positive recent economic data may finally alter circumstances.

If the U.S. economic growth data for 3Q 2003 (7.2 percent annualized GDP growth) marks the start of a resurgence, domestic manufacturing should benefit from the resuscitation.

Internationally, factors are more complex. As long as China's economy remains in high gear, a healthy overall demand will exist for metals of all types. Conversely, if that nation's central government has spent beyond its means, an economic reversal could be swift.

How such a slowdown would affect the American metals industry remains to be seen.

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

Oct 02   56.70 [cents]
Nov      60.50 [cents]
Dec      61.33 [cents]
Jan 03   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]

Source: American Metal Market (cents per pound)