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FMR NEWS - March 2009
MARKET REPORT
Ferrous
As you will know the scrap metal market - along with commodity markets around the world - went into freefall in September '08 leaving most of us wondering where the bottom would be. Fortunately we seem to have hit the bottom in Oct/Nov '08 and in the second half of December '08 started to see a steady, if not slow, increase in the Asian TEX Box price (regional scrap index).
The TEX price hit a low of US$150 / tonne in October '08, down from a high of US$735 / tonne in July '08 and recovered to be US$300 / tonne in early February '09, before softening in the last two weeks of February to US$264 / tonne.
All of you would have seen an increase in the rebate for steel in the second half of Jan and in early Feb due to this movement in the market, however we anticipate based on information to date, there is the possibility of a reduction in the scrap rebate by mid March. We will keep you posted if this occurs.
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Asian TEX Box in US$ from 1 December to 1 March
This index relates to processed, export quantity No.1HMS (No.1 Heavy Melting Steel).
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Non-Ferrous
We are still seeing fluctuations in most non-ferrous scrap commodities. The indication is that this has stabilised, however we still think it will take a considerable amount of time - if at all - before we see anything like the prices we did in July '08.
Aluminium, however, seems to be continuing its slide and scrap prices will be volatile for the foreseeable future. See international news for more.
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INTERNATIONAL NEWS
Market history
(Sourced from www.metalprices.com)
Copper and Aluminium market history for five months.
Market news
(sourced from Bloomberg unless otherwise specified. www.bloomberg.com)
Hopeful Signs For Aluminum - Harbor (Dow Jones)
0329 GMT [Dow Jones] LME 3-month aluminum at $1,427/ton, down $12 since yesterday's kerb on some mild profit-taking with 252 lots done so far. The metal has risen 5.8% so far this week and Harbor Intelligence is increasingly hopeful a floor may have been set; notes upward trend in the Baltic Dry index, first fall in LME inventories since November, pause in downward trend in Nalc's alumina prices and clear downward trend in the Fear/VIX index. Adds, "also aiding prices was some traders commenting that there are rumors that some aluminum producers are buying back hedges for 2009, which clearly means that producers believe that prices will increase ahead and that if we haven't hit bottom we are close to it" it says in report. However, warns it's still early days, cannot rule out test of $1,300 level. (JAC)
LME Copper Lower, But Tone Friendlier - Trader (Dow Jones)
0306 GMT [Dow Jones] LME copper slightly lower but not moving much, with market still feeding on somewhat more positive Chinese January PMI data, says HK-based trader. Discounts talk of China State Reserve Bureau buying copper for domestic stockpiles; "to me it doesn't make sense why the Chinese government would want to up stockpiles right now. China is still a net importer of copper.
Why would you want to support the price when domestic fabricators have difficulty selling their product?" Adds economic picture still getting worse, recent copper gains possibly down to fund buying, with few funds left in market with sufficient cash for opportunistic trading strategies. LME 3-month copper down $20 vs PM kerb at $3,395/ton.(EFB)
BHP First-Half Profit Drops 57% on Prices, Costs
BHP Billiton Ltd., the world's largest mining company, reported first-half profit dropped 57 percent, more than analysts expected, on costs to close mines and plants after metal prices slumped. Net income fell to $2.6 billion in the six months ended Dec. 31, the lowest since 2004, Melbourne-based BHP said today in a statement. That compares with the average estimate of $4.4 billion of six analysts surveyed by Bloomberg News. BHP booked $3.5 billion in one-time charges, including $2.7 billion for the mine closures. Chief Executive Officer Marius Kloppers said today slower demand for steel will have a "pronounced impact" and a weak outlook for the global economy will affect earnings this half. BHP, which booked a $386 million charge for its failed takeover bid for Rio Tinto Group, has joined Xstrata Plc and Rio in closing mines and cutting jobs as the worldwide recession curbs demand. "It all smacks of quite a serious downturn" said Peter Chilton, who manages the equivalent of $356 million at Constellation Capital Management Ltd. in Sydney, including BHP shares. "Earnings are going to be far more subdued." The stock gained 109 pence, or 9.4 percent, to 1,269 pence in London. The Bloomberg Europe Metals & Mining Index, which includes BHP and 12 other companies, rose 12 percent. Sales increased 17 percent to $29.8 billion in the half, while profit, excluding one-time items, rose 2.2 percent to $6.1 billion. BHP will pay a first-half dividend of 41 cents, up 41 percent from a year earlier. Cashflow from operations rose 74 percent to $13 billion.
BHP Says Ore Customers Returning as China Stockpiles Trimmed
BHP Billiton Ltd., the world's third- largest producer of iron ore, said stockpiles of the raw material used to make steel have been trimmed in China and customers are returning to the market, pushing cash prices higher. "You are starting to see the underlying demand of the Chinese economy", Chief Executive Officer Marius Kloppers said on a call to journalists. "We have seen in the steel business in China that the de-stocking cycle is almost complete and that means people are coming back into the market and buying." Cash prices of iron ore imported by China, the world's biggest buyer of the steelmaking ingredient, gained for the first time in a month on Jan. 12 on speculation the nation's stimulus package will spur construction demand. Spot prices are within 15 percent of last year's contract pricing, Kloppers said today. Chinese steelmakers are likely to win their first cut in contract prices in seven years because of the fall in demand. Prices may fall 30 percent according to a Bloomberg News survey of 11 analysts last month. Contract talks between producers and Chinese steel mills.
East Asian scrap import markets soften
Sentiment for imported scrap in east Asia has recently weakened, market sources in the region tell Steel Business Briefing. Bulk scrap bookings recently made in the region exceeded $300/tonne cfr. One cargo of US-origin shredded was booked in end-January at $317/t cfr China and three cargoes, for February shipments, were booked by Korean mills at $308/t cfr for HMS No.1 in mid-January. Trading sources tell SBB that Chinese scrap importers are now seeking to book shredded at around $300/t cfr. "There are too many offers (for scrap)" a Shanghai importer says. A regional supplier disagrees, saying "demand is in lull but supply is still tight." A regional trader believes that scrap prices rose too quickly from $240/t cfr to over $300/t in recent months and scrap prices need to correct since finished product prices cannot lift as quickly. Korean trading sources say that based on recent Korean bookings for Japanese H2 scrap of ¥24,000/t ($268) fob, HMS 1 prices are likely to be around $295/t cfr. Another says that Korean buying interest today could be around $290/t or under. While many parts of east Asia were quiet, China entered the market strongly to book large tonnages. Traders estimate that during November-January, around 1 m tonnes of ferrous scrap from Japan, USA and elsewhere were booked, along with around 500,000 t of basic pig iron, largely from Russia, Brazil and India. "International prices were cheaper than the Chinese domestic markets" a Chinese trader explains on why Chinese importers turned to raw materials from overseas.
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FMR MELBOURNE UPDATE
Acquisition - National Metal Recyclers
In November '08 Future Metals Recycling purchased National Metal Recyclers of Hallam, Victoria.
The handover was smooth and the two businesses have integrated successfully. Today Future Metals Recycling has over 1000 commercial bins servicing manufacturing, engineering, SME and waste transfer stations to name a few.
All of National's green bins will eventually be resprayed in Future Metals Recycling burgundy colours and will have the 1300 17 27 27 number painted on the side - this will make it easy to contact us. If you were a National client you should have received a letter detailing the changes in late 2008. Your sales representative will be around to see you soon. If you wish to see a representative earlier call the office anytime to organise an appointment.
The Hallam yard is still operational. Cameron and his team invite you to visit and drop off your scrap metal anytime.
New Centre - South Dandenong
This is your invitation to drop in, take a tour and have a cuppa at our new site at 194-204 Ordish Road, South Dandenong.
Our Centres feature:
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Computerised weighbridge to record volume, type and client details
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Well planned traffic flow for high efficiency
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Investment in the latest equipment
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Unloading service meeting OH&S guidelines
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Diesel Fuel now available
Our diesel fuel bowser at the South Dandenong site is now up and running and open to the public. It accepts credit cards or you can receive a Riordan Fuels account card to access fuel. Contact us on 1300 17 27 27 if you are interested in setting up an account.
Partnerships
As we move forward in 2009 we are looking more and more to utilise our clients' products and services to enhance our business.
We are pleased to report that Hilton Manufacturing is currently building 23m3 bulk bins. This 'closes the loop' and supports our clients during a difficult period of economic instability.
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1300 1 SCRAP |
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1300 17 27 27
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1300 1 SCRAP |
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1300 17 27 27
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1300 1 SCRAP |
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1300 17 27 27
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1300 1 SCRAP |
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1300 17 27 27
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