Piling on: after lagging behind some other metals, aluminum has charged into a bull run of its own.
During much of the past three years, while steel, copper and other metals were accelerating to new highs in pricing seemingly every other month or so, aluminum led a comparatively stable existence at times. But the later part of 2005 and early on in 2006, aluminum traders have seen their commodity show continued strength, as the ripple effects from China's growing industrial economy finally reach other shores.
In January of 2006, producers of secondary aluminum in particular were charging more for many of the alloys they make from aluminum scrap, and the London Metal Exchange London Metal Exchange (LME)
A market for trading base metals, where traded options contracts are available against the underlying futures contract. North American North American
named after North America.
North American blastomycosis
see North American blastomycosis.
North American cattle tick
see boophilusannulatus. special aluminum alloy contract (NASAAC NASAAC North American Special Aluminum Alloy Contract ) reflected the trend with record pricing.
MOST WANTED Most Wanted may refer to:
In 2005, however, increased buying from Asian markets may have helped provide the critical difference that has helped begin to push aluminum scrap grades into new pricing levels.
Figures collected by the U.S. Department of Commerce reveal that in the first 11 months of 2005, aluminum scrap exports increased nearly 66 percent compared to the first 11 months of 2004. For the used beverage can A beverage can is most often an aluminium can manufactured to hold a single serving of a beverage. Overview
The early metal beverage can was made out of steel (similar to a tin can) and had no pull-tab. (UBC UBC Uniform Building Code
UBC University of British Columbia
UBC Union of the Baltic Cities
UBC United Brotherhood of Carpenters
UBC Universal Battery Charger
UBC Union of Baltic Cities
UBC Universal Bibliographic Control
UBC Used Beverage Cans ) grade, the increase was even more dramatic, as overseas buying increased by nearly 300 percent.
China was the key destination for the material, accounting for more than 60 percent of all nonferrous scrap exports, with a substantial presence not only in aluminum, but in copper and in zinc, as well.
The marketplace is feeling the effects of increased Chinese buying. "It never slowed down at Christmas time," notes nonferrous broker Michael Kirk of Golden Metals Trading, Littleton, Colo. "Everyone is wondering when the bubble is going to break."
If the copper market is any indication, a pricing plunge may not be in the immediate forecast. Since China came heavily into the red metals scrap market, pricing has remained strong, and aluminum could follow suit.
"Chinese buyers are coming in for grades such as old aluminum sheet at 2, 3 or 4 cents more," remarks Warren Goldstein Rabbi Warren Goldstein (b. cir. 1973) is the chief rabbi of South Africa. Born in Pretoria, he currently lives in Johannesburg. He is the first chief rabbi of South Africa that was born in South Africa and the youngest ever to be appointed to that post, at age 32. of Lorbec Metals Ltd., Saint Hubert Saint Hu·bert or Saint-Hu·bert
A town of southern Quebec, Canada, a suburb of Montreal east of the St. Lawrence River. Population: 75,912. , Quebec, Canada.
The effects of such buying: "Scrap is tight," states Goldstein. "Aluminum has been tight since early December, when a lot of that metal started going overseas."
The question to be answered in 2006 is whether the increased Chinese buying that began in the second half of 2005 is an ongoing pattern or a temporary spurt. Goldstein says his father traveled to China in the fourth quarter of 2005 and came away believing more buying power Buying Power
The money an investor has available to buy securities. In a margin account, the buying power is the total cash held in the brokerage account plus maximum margin available.
Also referred to as "Excess Equity. remains in the Chinese market. "Most of the yards were empty or at least low on material," he says of aluminum scrap inventories.
PROFIT PUZZLE. Aluminum pricing may be skyrocketing, but that doesn't mean everyone is a winner in such a market. As it has with other metals, the escalating pricing is creating dilemmas along with the opportunities.
Secondary smelters and other consumers of aluminum scrap have been bemoaning tight (or non-existent) margins for years. The recent market surge has not necessarily helped the situation, as smelter operators continue to bemoan be·moan
tr.v. be·moaned, be·moan·ing, be·moans
1. To express grief over; lament.
2. To express disapproval of or regret for; deplore: an inability to pass on higher materials and energy costs.
Wabash Alloys LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control has been consolidating capacity for some time and in 2005 scaled back operations in Cleveland. At the company's Wabash, Ind., facility it is using temporary workers in place of locked-out union workers with whom they have been unable to reach an agreement for some 10 months.
2005 appears to have been a better year for Aleris International Inc., based in Beachwood, Ohio Beachwood is a city in Cuyahoga County, Ohio, United States. It is a suburb of Cleveland. The population was 12,186 at the 2000 census. Geography
Beachwood is located at (41.482226, -81.504001)GR1. . The company has continued acquiring additional facilities since its inception after the IMCO-Commonwealth merger in 2004 and it has reported black ink through the first nine months of 2005.
The company recycled some 2.5 million pounds of aluminum in the first nine months of 2005, producing a net income of more than $79 million. Aleris has cited strong cash flow as helping it reduce its net debt during the time period as well.
The emergence of Aleris, with its considerable market share, could boost the secondary smelting industry's ability to address any overcapacity o·ver·ca·pac·i·ty
Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. in the market. In the news release accompanying its third quarter financial results, however, the company reports only the closing of a California rolling mill "following an evaluation of redundant manufacturing facilities" related to one recent acquisition.
The company acknowledges many of the challenges in the secondary smelting market in the same news release, noting that income in its aluminum recycling segment has been affected by "lower than anticipated metal recovery performance, higher natural gas costs and tighter specification alloy spreads."
On the latter front, it remains to be seen whether the rising aluminum prices dictated by such indexes as the LME See London Metal Exchange.
See London Metal Exchange (LME). NASAAC (North American Special Aluminum Alloy Contract) figure will help secondary smelter operators.
Buyers such as Goldstein, who helps purchase aluminum scrap for Lorbec's Noral Alloys foundry in Laval, Quebec Laval (pronounced ) is a city and a region in southwestern Quebec, Canada in the Greater Montreal Area. It is located on Île Jésus, across the Rivière des Prairies from Montreal. , are concerned that Chinese buyers can continue to offer prices above those offered by North American buyers pegging themselves to the NASAAC number. Such a phenomenon has been common for domestic copper scrap buyers who peg their numbers to the Comex listing, while Chinese buyers peg their purchases to a higher Shanghai index figure.
Also of concern: Smelters set a price for their manufactured product at the start of the month, but then watch as the prices they pay for scrap quickly escalate. "As [scrap] prices are rising, my profits are shrinking," Goldstein says of Lorbec's Noral Alloys facility.
Brokers of aluminum scrap can be in a position to benefit, though Kirk notes that larger domestic scrap buyers have moved quickly to push freight costs back onto brokers and sellers, representing a major expense and time consideration for the seller. "A lot of the smaller generators don't have the capability to schedule trucks, but the managers at the plants are trying to push it that way."
Spreads still seem tight to those involved in the market. While a seasonal tightness in supply may share part of the blame, buyers and sellers say strong ongoing demand will keep markets hectic.
Even higher pricing has not necessarily brought out enough new scrap, whether because it simply isn't there or because speculators sensing positive momentum are holding on for now. "Some dealers hold because the market does seem to go up every day," says Goldstein. "I can raise my prices, but they hold off to see if I will raise them one more time."
APPLICATION ISSUES. If Chinas aluminum and aluminum scrap demand has taken a couple of years to catch up with steel and copper demand, it may simply be a function of aluminum's place in the economic development timetable.
Demand for steel in China is driven by many markets, but among these are construction-heavy applications for steel beams and reinforcing bar.
Similarly, copper is an infrastructure-intensive material that has been used in record amounts in China as new electrical and telecommunications grids have been created.
While aluminum is certainly used in construction applications, its presence is not as widespread in public works public works
Construction projects, such as highways or dams, financed by public funds and constructed by a government for the benefit or use of the general public.
Noun 1. , industrial and office construction applications.
Demand for the metal is starting to grow, however, as Chinas consumer economy expands.
Some commodity analysts are convinced that this progression in the Chinese economy will make aluminum a hot property in 2006. The growth of the Chinese consumer economy may also be coupled with a tightness in aluminum supply. "Restrictions on the growth in alumina supply have limited primary smelter utilization in the past two years," a Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/) (ISIN: DE0005140008, NYSE: DB) (English: German Bank report has concluded, as reported by the Bloomberg news agency.
As they have when shortages of iron ore and primary copper have occurred, Chinese metals producers are likely to head deeper into the overseas scrap market to help make up for a shortfall.
The higher scale prices are certainly causing North American scrap sellers to look at any and all scrap sources, which unfortunately has also encouraged the criminal element (see sidebar p. 44).
"Overseas buyers are just starting to get aggressive," says Goldstein. "If they come in again strong after the Chinese New Year Chinese New Year (Simplified Chinese: ; Traditional Chinese: ; Pinyin: Chūnjié), or Spring Festival , I'm not sure what's going to happen."
With aluminum trading at more than $2,000 per metric ton in mid-January, Goldstein said he won't be surprised at all to see it move past $2,500 per ton and then keep going.
Goldstein is not alone in his observation. As the Duetsche Bank report indicates, many of the same investors who have been reaping the rewards of red-hot copper and steel markets see aluminum as the bull market to watch in 2006.
METALLIC CRIME WAVE
Reports of metals thievery Thievery
See also Gangsterism, Highwaymen, Outlawry.
Alfarache, Guzmán de
picaresque, peripatetic thief; lived by unscrupulous wits. [Span. Lit. have increased dramatically with the sustained surge in pricing during the current bull market.
Thieves have brazenly removed copper sheeting from an onion-domed orthodox church in Cleveland, stolen several window air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. units from the same building and removed aluminum siding from single-family homes.
A January AP news report noted a scrap metal-seeking crime wave in Springfield, Ohio Springfield is a city in the U.S. state of Ohio and the county seat of Clark CountyGR6. The municipality is located in southwestern Ohio and is situated on the Mad River and Buck Creek, approximately 45 miles (72 km) west of Columbus and 25 miles (40 . that affected some 70 homes and businesses.
Members of ISRI ISRI Institute of Scrap Recycling Industries
ISRI Institute for Software Research, International (Carnegie Mellon University)
ISRI Information Science Research Institute
ISRI Intelligent Systems Research Institute (the Institute of Scrap Recycling Industries Inc.) have noticed a dramatic increase in the number of e-mailed bulletins they receive warning them to be on the lookout for in search of; looking for.
See also: Lookout specific stolen materials. In late 2005 and early 2006, these reports have included copper wire stolen in Ohio, a truckload truck·load
The quantity that a truck can hold.
truckload n → camión m lleno of brass alloys taken in Indiana and 10,000 pounds of metallic parts reported missing in Michigan.
The Cleveland area has also witnessed armed hold-ups at scrap metals facilities, as word of the lucrative metals business has caused some thieves to skip the metals part of the equation and seek to steal the cash instead. At least one employee of a metals recycler has been shot and wounded this winter.
Danger has also befallen pedestrians and motorists who have encountered holes created by missing manhole covers in roads or sidewalks. Such an incident led to the death of a 6-year-old boy in Bogota, Colombia, in December.
The author is editor of Recycling Today and can be reached at firstname.lastname@example.org.