NEW YORK A shortage of nonferrous auto shred, commonly known as zorba, in China has caused export prices to strengthen over the past week, sources said.
The crimp is due to Chinas Operation Green Fence, which increases enforcement on imports of raw material into the country, particularly on items containing circuit boards, ballasts, lead-coated copper cable and low-recovery breakage components (amm.com, May 28).
"We are finding that some of our smaller customers in China are now short of zorba because suppliers fear the arduous inspection of their materials," one exporter told AMM. "Likewise, Chinese importers, who also face penalties for rejections, are paying premiums for clean material even though there is really nothing wrong with the material they have been importing for years. Overzealous inspectors are creating a lot of unnecessary angst that in the end is inflationary in a market that has scrap pretty much fully valued already."
A second exporter said that prices for zorba with higher metallic contentin the 94- to 95-percent rangehad spiked over the past two weeks.
"Two days ago I went out to sell a few loads of zorba and the prices my Chinese buyers came back with were surprisingly strong. ... At this time, China needs zorba. They are coming in stronger than the rest of the market. I was able to sell the loads for around 77 cents a pound, which is up a cent or two from last month," he said.
"Its going to be a rubber band effect: you stretch it until the point it snaps and everyone goes into a feeding frenzy. All those containers that have been held up at ports are going to start to work their way out," a third exporter told AMM. "I wouldnt be surprised to see prices increase further over the next month."
Conversely, others felt that a perceived shortage of material in China was being overblown.
"There is no shortage of material, in fact there is an oversupply of aluminum," a fourth exporter said. "They can get other types of scrap from within China. That could change, but as of now I have not been informed of any shortage. I have been consistently getting in the 75- to 76-cent range for material with 94-percent metallic content."