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For the week beginning Monday, November 14st
Commodities got the week off to a mixed start as support from political changes in Italy and Greece proved short-lived. In London, Reuters reports that official LME 3-mo. copper started the week in positive territory, rising to $7,741.50/mt this morning, while official 3-mo. aluminum ($2,160/mt), nickel ($18,055/mt) and tin ($21,650/mt) were down from Friday’s closing prices.

In New York, copper prices also firmed following a bullish report from Goldman Sachs, with COMEX December copper up around 5 cents to $3.51/lb. in mid-morning trading. Other commodities didn’t fare as well due in part to continued European worries, with NYMEX crude oil down below $98/bbl this morning, while gold prices dipped below $1,780/to.

Following a 260 point jump on Friday, the Dow Industrials eased by around 0.2% this morning as the dollar strengthened to $1.364 vs the Euro but weakened to less than 77 Japanese yen following a report that the Japanese economy rebounded 6% on an annualized basis in the third quarter.

Manufacturing reports should take center stage in the U.S. this week as the Federal Reserve reports on October industrial production and capacity utilization on Wednesday and regional reports for Nov manufacturing output in the New York and Philadelphia regions come out this week as well. Markets will also be keeping an eye on the latest inflation, retail sales, housing market and leading indicator figures as well. We’ll have all the latest highlights in this week’s Friday Report, including the latest on U.S. recovered paper and plastic scrap export sales.

And to find out what’s been going on in the plastics markets, don’t miss this week’s ISRI/APR Plastics Commodity webinar to be held on November 16 at 2 p.m. For more information, please contact either jonathanlevy@isri.org or josephpickard@isri.org. The European Financial Crisis and U.S. Financing Opportunities The European financial crisis has sent jitters around the world. For corporate financial managers in the United States the crisis raises questions about the availability of credit for mergers and acquisitions, operating lines and other purposes.

So far it appears that credit availability is good for firms with strong financials, though companies with marginal strength are still having difficulties securing loans. Some signs of financial stress have been pushed upward, but by a surprisingly small magnitude. To gauge this, the following table shows various indicators of financial stress. The first column numbers are the average prior to the worst of the financial crisis, in the fall of 2008.

Notes on the data: the pre-2008 averages are calculated over different time periods, based on when the earliest data are available. As a result, these averages should be used to compare with recent data, but not from one spread to another.TED spread is the difference in yields between Eurodollar banks deposits and United States Treasury bills, both of 3 month maturity.A2P2-AA spread compares the interest rates on commercial paper of the two different grades.Baa-10 yr spread is the difference between interest rates on corporate bonds rated Baa by Moodys and 10-year U.S. treasuries.Junk bond spread is Merrill Lynch’s data on the yield adjusted spread between bonds rated less than investment grade and U.S. treasuries.

Although the risk measures are above their post-crisis lows, they are all far, far less than their 2008 highs.Banks are lending more to commercial and industrial enterprises, according to the Federal Reserve’s latest data. C&I loan volume has increased eight percent in the past 12 months. Both supply and demand are at work here. Part of the low weak demand of the recent past was due to credit-worthy companies not needing to borrow, along with banks having tightened credit standards. Those credit standards have been gradually eased in the last year, as reported in the Fed’s quarterly survey of bank loan officers. The banks’ willingness to lend is further confirmed by the narrowing of lending spreads as banks compete for the business out there. Thus, a finance officer contemplating a new bank loan need not be too worried about the European debt crisis, at least not yet. Those companies that have not been eligible for bank credit will still have a challenge, as the non-bank lending market has not returned to its previous vigor.

Further, the European situation could deteriorate rapidly. Muddling through is probably the best forecast now, but nobody can discount the possibility of a general financial crisis that would impact United States bank lending. Planning in finance teams should focus on maintaining the firm’s bankability. Scenarios that would push the company outside of bank lending standards should be studied with mitigating tactics developed. For those businesses that are not quite bankable, improving financial ratios should be of paramount importance.

Even if the corporation anticipates no need to borrow, the availability of a line of credit is often tremendously valuable. The sooner that bank credit can be assured, the better off virtually every company will be. ISRI Spec of the Week: From ISRI’s Scrap Specifications Circular 2011, Guidelines for Nonferrous Scrap: Taint/Tabor CLEAN MIXED OLD ALLOY SHEET ALUMINUM Shall consist of clean old alloy aluminum sheet of two or more alloys, free of foil, venetian blinds, castings, hair wire, screen wire, food or beverage containers, radiator shells, airplane sheet, bottle caps, plastic, dirt, and other non-metallic items. Oil and grease not to total more than 1%. Up to 10% Tale permitted

Monday’s Quote: “Money isn't everything but it sure keeps you in touch with your children.” -- J. Paul Getty