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Export interest may boost US zorba prices

Keywords: Tags  scrap, nonferrous auto shred, aluminum scrap, zorba, scrap prices, Sean Davidson


NEW YORK — Domestic prices for zorba, a nonferrous auto shred, could firm due to a gradual return of Chinese interest and an uptick in export tags over the past month.

The material—which contains a large percentage of aluminum scrap, along with other metals like brass, copper and stainless steel—has predominantly been shipped to China.

However, zorba export volumes dropped sharply in March and April after Chinese aluminum smelters were forced to curb scrap purchases largely due to reduced access to credit, market participants said.

Traders also pointed to the absence of the largest Chinese buyer of U.S. zorba due to permitting issues in China, along with a depreciation of the yuan caused by Chinese regulatory action designed to curb currency speculation, that compounded supplier woes and sent zorba prices plummeting (amm.com, March 26).

Sustained interest from Indian buyers throughout May and a return of some Chinese buyers looking to keep inventories in check has pushed zorba prices higher. Suppliers reported limited buying of 94- to 95-percent metallic content zorba by Chinese companies in a price range of 67 to 69 cents per pound over the past two weeks on an f.a.s. East or West Coast basis, while Indian companies reportedly booked the same quality material in a range of 70 to 72 cents per pound.

These price ranges reflect a 1- to 2-cent-per-pound increase in prices to Chinese buyers and a 3- to 4-cent-per-pound gain in those to Indian buyers vs. a month ago (amm.com, April 25).

Improved demand has combined with lower U.S. shredded scrap volumes to provide support for higher prices, several buyers and sellers said. Many said suppliers will look to push domestic prices to at least 67 to 68 cents per pound for June.

"It’s baffling. Chinese buyers are coming in but won’t buy large blocks. They come in selectively and pull back until they need more material on the water. Every week they buy a little bit at a time. From their feedback, they are back because they have commitments into the Japanese alloy market and credit is loosening. So zorba prices are up 6 to 7 cents from the lows in the first part of April," one supplier said.

However, A buyer for an Indian company said suppliers were incorrectly calling it a return of Chinese buying.

"Chinese buyers have started buying some quantities, but their prices are still very low compared to Indian buyers. I think 60 percent of zorba is still going to India. Indian buyers are kind of overbooked now and started to refuse some quantities, due to which suppliers are forced to sell to Chinese buyers at a lower price compared to India," he said.

A buyer at a large Chinese company said that the country’s secondary aluminum smelters were always in the zorba market. "We have no problem and sourced good volumes from our regular supplier in May. I believe Chinese buyers are not pushing up the zorba price because of persistent weakness in aluminum ingot prices and better zorba scrap flow," he said.

A portion of this undeterred export volume to some Chinese consumers could stem from their ability to find other ways to describe the material being imported into China, one trader said.

"We are selling some typical zorba at 72 to 76 cents per pound, depending on the metallic content and red metal content. However, most of it has to be moved in a way to get around Chinese customs, as they are still hell bent on circuit boards. Every load of zorba has circuit boards," he said.

"The (price) uptick started because the Chinese were out of the market, low on inventory and the prices were cheap compared to normal. A bit of it now is the copper price has jumped, and so has red metal," he added.

The gradual uptick in Chinese interest was simply smart purchasing strategy, another supplier said. "They are now trying to average down their purchases, prior to needing to pay up. If they sense that we are at a market bottom, they will look to accumulate quickly prior to commodity increases."


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