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Copper scrap discounts narrow on short supply

Keywords: Tags  copper, brass, copper scrap, brass scrap, scrap, Comex, Nathan Laliberte

NEW YORK — An ongoing copper scrap shortage and a decline in Comex copper prices caused discount spreads to narrow March 20, as availability concerns began to present significant headwinds for scrap dealers, sources said.

"Business has been miserable. I wish I could tell you there was something going on. People are banging on my door to buy material. ... I don’t have anything to sell them," one scrap trader said.

"There is nothing going on in people’s yards," a second trader said. "Everyone is calling around to see if the others are slow. I haven’t seen things this sparse in quite some time."

The discount for brass mills’ No. 1 copper scrap fell to 4 to 6 cents below Comex compared with a 6- to 8-cent discount a week earlier, putting prices at about $3.39 to $3.41 per pound based on a March 20 Comex copper price of $3.4465 per pound for May delivery. Meanwhile, the discount for refiners’ copper scrap No. 1 dropped to 14 to 16 cents from 18 to 20 cents previously, putting March 20 prices at around $3.29 to $3.31 per pound. Refiners’ No. 2 discounts tightened to 31 to 33 cents, or $3.12 to $3.14 per pound, from a 33- to 35-cent discount March 13.

"It’s definitely been a while since I have seen spreads come in this much," a third trader said.

"To a large extent, scrap is still very tight," a fourth trader said. "The demand picture is still decent, though I can’t be sure whether that is because there is a lack of supply or there is actually increased demand. My guess would be that overall demand is being exacerbated by the lack of supply."

Discounts for brass ingot makers’ No. 1 bare bright dipped to 6 to 9 cents, putting prices at about $3.36 to $3.39 per pound March 20, down from a 7- to 10-cent discount previously, while discounts for brass ingot makers’ No. 1 slimmed to 17 to 19 cents, or $3.26 to $3.28 per pound, vs. an 18- to 20-cent discount previously. No. 2 discounts fell to 31 to 35 cents, or $3.10 to $3.14 per pound, from a prior discount of 33 to 37 cents, and light copper tightened to a 44- to 47-cent discount from a 46- to 50-cent discount previously, putting prices at $2.98 to $3.01 per pound.

Copper scrap prices are lower than in previous weeks due to the decline in Comex copper prices and a lack of any significant pickup in demand. The May-delivery Comex copper contract weakened further March 21, settling at $3.435 per pound.

Meanwhile, brass scrap prices held steady March 20, with market participants noting that consumers continued to compete for adequate shipments of material.

"Unlike copper scrap, brass scrap is not tied to Comex," one brass scrap trader said. "It’s not one-for-one. If you find a consumer that needs brass scrap, you will be shocked at what they are willing to pay right now. The dynamic is pretty simple: Demand is outpacing supply."

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