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For the week ending Friday, November 18 th
Base metal prices mostly trended lower this week as concerns about the spreading impacts of the European debt crisis and accompanying Euro weakness weighed on prices through much of the week. In London, official 3-mo. copper prices opened firmer on Monday but by Thursday had dropped to $7,525.50/mt.

LME official 3-mo. aluminum followed suit, falling to $2,105.50/mt on Thursday morning before firming modestly late in the week. While the World Gold Council reported that central bank gold purchases in the 3rd quarter more than doubled to 148.1 metric tons, gold prices also came under pressure.

COMEX gold for December delivery dipped as low as $1,711/to in intraday trading on Thursday before recovering somewhat on Friday. Crude oil prices, meanwhile, rebounded sharply, surging above $100/bbl by midweek before retracing some those gains in the second half of the week.

On Wall Street, European worries largely trumped better than expected U.S. economic data as the Dow Industrials declined in three out of the first four trading sessions of the week to close at 11,770.73 on Thursday. On Friday morning, base metal prices steadied in London, with LME official 3-mo. copper ($7,610/mt), aluminum ($2,107/mt), and zinc ($1,937/mt) all opening firmer.

While prices in London lost steam as the day progressed, in New York COMEX December copper was holding onto modest gains, trading around $3.41/lb. in the afternoon. Following Thursday’s slide, COMEX gold prices steadied above $1,720/to, while crude oil dipped below $98/bbl.

On Wall Street, despite lingering doubts about debt talks in the U.S. and in Europe, stock prices mostly advanced, with the Dow Industrials up around half a percentage point in afternoon trading as the dollar weakened to $1.353 vs. the Euro and traded below 77 Japanese Yen.

Macro news…
While worries about European debt problems spread from Greece and Italy to Spain and France this week, the news on the U.S. economic front was increasingly positive this week. Of particular note, the Federal Reserve reported this week that U.S. industrial output expanded 0.7% in October and was up 3.9% year-on-year, while capacity utilization improved to 77.8% last month.

In addition, manufacturing output increased 0.5% in October (+4.1% y-o-y), including greater than 2% gains in electrical equipment, appliances and components; motor vehicles and parts; and aerospace and miscellaneous transportation equipment. Here’s the recent trend: Other highlights this week included a 0.5% increase in U.S. retail sales in October, a 0.1% decline in the consumer price index last month (core CPI +0.1%) and the lowest initial claims for unemployment (388,000) in many months.

In addition, the Conference Board's Leading Economic Indicators Index increased 0.9% for October, the biggest monthly gain since February, while regional manufacturing reports showed slow, but improving manufacturing output in November. And while there are still plenty of economic and debt-related concerns to go around both here and in Europe, we’d say that things in the U.S. were looking up this week.

MF global update News reports late this week confirm that a U.S. bankruptcy judge approved a request from the trustee supervising the liquidation of MF Global to allow the transfer of $520 million in customer’s cash-only accounts. The transfers are reportedly expected to affect between 15,000 and 21,000 of MF Global’s commodity customers.

The $520 million represents approximately 60% of the $869 million held in the accounts and the transfers are expected to start “in about a week” according to The Wall Street Journal. Late last week the CME Group extended an offer to the trustee to guarantee $300 million of customer money in order to “accelerate interim distributions, and…not {as} a general guarantee of the customer shortfall,” Reuters reported.

Ferrous…
U.S. steel mill shipments slipped 4.3% to 7.947 million net tons in September, according to the latest figures from the American Iron and Steel Institute (AISI). As compared to last year, however, AISI reports that September shipments were up 11%, while cumulative mill shipments were up 8% as compared to the Jan-Sep 2010 to reach nearly 63.2 million net tons (91 million net tons on an annualized basis).

For the week ending November 12, AISI reports that raw steel production increased 2.6% from the preceding week to 1.836 million net tons as the capacity utilization rate advanced from 72.2% to 74.1%. In other news, Platts reported this week that the Chinese eliminated 11.86 million mt of steel capacity in 2010, surpassing the original target for a reduction of 7.53 million mt of capacity.

Meanwhile, our friends at Steel Market Intelligence report that total carbon steel inventories dropped by 1.5% in October and fell for all products, including a 1.1% drop in flat-rolled inventories. This week, Platts was indicating a midpoint HRC price of $630/st ex-works Indiana, unchanged from last week. Ferrous scrap prices were reported to be somewhat softer this week, with Scrap Price Bulletin reporting a composite No. 1 HMS price of $372.50/gt, down from $375.83/gt last week, while indicating that shredded prices during the last five years have increased from the second week of November to the second week of January.

As of Friday, the Steel Index was showing a $1/ton drop in its shredded reference price this week to $421/lt delivered Midwest, while reporting steadily declining Turkish import prices, with No. 1/2 HMS (80:20) down $13/ton on the week to $412/ton CFR Turkish port

Nonferrous…
Nonferrous prices got off to a mixed start on Monday and trended downward for much of the week as concerns about contagion effects from the European debt crisis intensified. While LME prices firmed somewhat on Friday morning, for the year base metal prices have not performed well:
Year‐to‐Date LME Prices (Official 3‐Mo. Ask) â€ $/mt

Metal                 11/18/2011     12/31/2010     % Change
Aluminium           2,107.0              $2,468.0             ‐15% 
Copper               $7,610.0             $9,665.0             -21%
 Nickel                $17,925.0           $24,950.0           ‐28%
Zinc                    $1,937.0             $2,442.0             ‐21%
Lead                   $2,026.0             $2,563.5             ‐21%
Tin                      $21,600.0            $26,920.0          â€20%

So far this year nickel has had the worst performance among the base metals, with LME official 3-mo.nickel down 28% since the end of 2010, followed by copper, lead and zinc, which are all down around 21%.

This week, the International Lead and Zinc Study Group (Lisbon, Portugal) reported that global lead metal production during Jan-Sep 2011 totaling 7.63 million mt exceeded usage by 170,000 mt. Over the same period, ILZSG reports that the global zinc metal market was in a surplus of 275,000 mt as a 1.2% increase in demand was outstripped by a 2.7% increase in zinc metal production. Platts this week reported tighter copper scrap spreads for No. 1 and No. 2 @ 24 cents and 38 cents under March COMEX, respectively, with Bare Bright again indicated at 8 cents under. Secondary aluminum prices in the U.S. were reportedly steady to slightly firmer this week, with old sheet and cast mostly indicated in the 68-70 cents price range, siding slightly firmer, and MLC mostly in the low 70’s.

Recovered Paper and Fiber… The latest trade figures from the Census Bureau show that overseas demand for U.S. recovered paper eased in September as the value of monthly shipments fell by $20 million to $304 million. By volume, September exports were off nearly 5% to around 1.86 million short tons on lighter loadings for S. Korea, Mexico and India, among others. The monthly figures also show falling per unit prices for OCC, high grade deinking, ONP and mixed grades. For the year-to date, export sales of recovered paper were still up 14% by volume to approximately 17.5 million short tons and were 19% by value to $2.87 billion through September. The biggest overseas buyers during JanSep included: China $1.7 billion (+33%), Mexico $260 million (-5%), India $223 million (+28%), South Korea $171 million (+15%), and Canada $151 million (+1%).

Here’s a look as the biggest export regions for recovered paper and fiber shipments last year: The recently softer export demand apparently contributed to the sharp correction in recovered paper prices in recent months, with RISI Pulp & Paper Week reporting a national average OCC price of $127/st in November, down a remarkable $31 per ton since October and off $46/ton since September. Other grades have reportedly fared even worse, with mixed paper down $32/ton to $90/st this month, while the national average price for office paper (OP) plunged by $57/ton since October and by more than $95/ton since September to $148/st in November, RISI reports.

Market participants as of late have reportedly 5 been looking for restocking by U.S. mills and rising demand from Chinese box plants to underpin prices… stay tuned. Thanks to all who participated at our plastics webinar on Wednesday, especially our speakers Elizabeth Bedard for the Association of Postconsumer Plastic Recyclers and Stephanie C. Baker of KW Plastics.

In case you missed it, we’ll be making presentation from the webinar available, including our slides on the recent growth in the global plastic scrap market and overseas demand for U.S. plastic scrap. Some highlights: ï‚· Data from the U.N. show that global plastic scrap exports surged from less than $1.4 billion dollars in 2000 to over $6 billion in 2010, while the volume of global shipments more than tripled from 4.1 million mt to 15.3 million mt.

The latest trade figures show that the value of U.S. plastic scrap exports in September came in at $101 million, little changed from the $102 million of export sales in August. But for the year-to-date, U.S. plastic scrap shipments were up 9% by volume to 1.6 million mt and 16% by value to $788 million through Sep. Here are the top 5 overseas destinations by value during Jan-Sep 2011: China $390 million, Hong Kong $198 million, Canada $71 million, India $37 million and Mexico $13 million. Of note, Plastics News reports this week that Chinese plastic scrap imports through Guangzhou dropped from around 520,000 metric tons in the second quarter to 240,000 metric tons in the third quarter (and only 22,000 tons in October) as customs official have reportedly been enforcing tighter import rules on “solid waste.” Repeat to yourself three times: “Scrap is not waste, disposal is not recycling.”

ISRI 2012 CONVENTION UPDATE: BEWARE OF CONVENTION HOTEL SCAMMERS – UP TO THEIR TRICKS ALREADY! Beware of any telemarketing you may receive offering hotel rooms for the 2012 ISRI Convention and Exposition in Las Vegas! Exhibitors at the convention are reporting that an individual claiming to work for “Exhibition Housing Services ” or “Convention Housing Services” is contacting them offering special rates for hotel rooms at the ISRI convention. The last time ISRI was in Las Vegas, several people fell for this ploy, pre-paying for rooms and finding themselves in Las Vegas with no reservations at all. ISRI’s hotel block for the convention will open the first week in December. The only place to book rooms in the ISRI hotel blocks at Mandalay Bay, THEhotel, and the Four Seasons Las Vegas is at our official convention website, www.ISRIConvention.org. Look for announcements here and on that site for the official opening date. Thanks! ******

This Week’s Quote: “There is an eloquence in true enthusiasm.” -- Edgar Allan Poe
This Week’s Thought: Laughter is the closest distance between two people.
This Week’s Love Story: A man and a woman who had never met before, but who were both married to other people, found themselves assigned to the same sleeping room on a trans-continental train. Though initially embarrassed and uneasy over sharing the compartment, they were both very tired and fell asleep quickly, he in the upper berth and she in the lower. At 1:00 a.m., the man leaned down and gently woke the woman saying, 'Ma'am, I'm sorry to bother you, but would you be willing to reach into the closet to get me a second blanket? I'm awfully cold.' 'I have a better idea,' she replied 'Just for tonight, let's pretend that we're married.' 'Wow! That's a great idea!', he exclaimed. 'Good,' she replied, 'Now get your own freakin’ blanket.