The commodities trade market is struggling as steel and aluminum free fall continue but trade talks between U.S. and China resume.
With the lack of a trade market with China, scrap metal prices continue to suffer. Both the domestic and export market are very weak potentially due to an upcoming trade deal. In recent days there have been promising compromises from both the U.S. and Chinese sides though at this point nothing to improve the metal market on a whole, let alone the scrap market specifically. Last month, the US-China trade deal was on rocky footing so it seems as though things have been stabilizing a bit between the two countries.
In this months report, scrap steel prices declined by 0.75% related to the previous month. This is now the fifth consecutive month the scrap steel market has declined in a row. If you are looking for something positive though, the 0.75% month-over-month decrease is the smallest drop in value during this period. The decrease in value overall was a little over $1/ton bringing the average price of scrap steel from crushed auto bodies to about $159/ton. Year-over-year the market has fallen over 21% as scrap steel was still priced over $200/ton in September 2018.
In the past few months, we have reported more significant decreases in different regions around the country than others. Specifically, in Zone 4 (northeast) and Zone 5 (southeast). This month, there are no significant decreases in value compared to another part of the country as each region we follow decreased $1-2/ton.
Trade Market Can’t Make Up Tariff Dollars for Aluminum, Other Recycled Products
While steel is our main focus for its impact on the value of end of life vehicles, we follow other commodities markets as well. Many of the products that cars are comprised of have struggled along with scrap steel, some such as aluminum have been hit even harder.
Without the export market to be able to move aluminum scrap and combined with the tariffs on aluminum products being imported into the U.S. the market has really struggled. In fact, this year the average price of aluminum scrap has fallen more than scrap steel.
Precious metals markets have actually been surging in the opposite direction of steel and aluminum. Due to supply constrains both platinum and palladium, precious metals found in catalytic converters, have been performing very well. In fact, palladium has set an all time record for value. Even though things aren’t looking great for the scrap trade market overall, you can be assured there will always be some value in your catalytic converter!