1987 Commodity Wrap-Up: Banner Year for U.S. Metals & Paper

With the U.S. economy still expanding, domestic metals and paper industries are finishing up another positive year. Here is a statistical summary of the success.

By Robert J. Garino

Robert J. Garino is director of commodities for the Institute of Scrap Recycling Industries, Washington, D.C.

America's consumers, producers, processors, traders, and brokers of metals and paper participated fully in the 4 percent increase in the 1987 Gross National Product. The U.S. economy finished its fifth year of expansion following the 1981-1982 recession.

Although the metals and paper industries experienced important increases over the past half decade, overall consumption and scrap recovery was not always uniformly positive. However, in 1987, aluminum, copper, lead, zinc, iron and steel, stainless steel, and paper registered significant consumption and recycling gains over 1986. Scrap's share of the market either maintained levels posted the previous year or showed increases. Many all-time consumption/ shipment records were set in 1987.

Following are statistical summaries for last year.

Aluminum

Total domestic supplies of aluminum (primary production plus scrap recovered) increased 8 percent in 1987, while total net trade in ingot, semis and scrap decreased approximately 33 percent. Although apparent consumption rose modestly in 1987, actual shipments rose 6.3 percent to 7.7 million tons, according to the Aluminum Association. Aluminum worldwide producer stocks fell by nearly 500,000 tons and LME aluminum prices (cash) were 22 percent higher than the 1986 average.

Copper

Virtually every measure of 1987 copper production and consumption showed year-on-year increases over 1986. A major feature underpinning the copper market last year was the steady, worldwide drawdown of stocks held by producers, consumers, merchants, and exchanges. This, coupled with solid domestic demand reported by the brass, wire, and tube mills, pushed copper values to levels not seen in years. The Metals Week annual average for 1987 showed a +26 percent increase in COMEX (first position) and a +27 percent increase for No. 2 scrap over 1986.

Lead

In response to reported supply tightness on both sides of the Atlantic in 1987, U.S. secondaries reclaimed approximately 740,000 tons, up 20.2 percent over 1986. Domestic consumption of lead was up 6.2 percent, despite the fact that shipments of replacement and original equipment batteries registered a scant 0.1 percent increase over 1986. Exports were lower due to steady domestic demand coupled with first half 1987 regulatory uncertainties, which inhibited battery shipments overseas. North American producers' list prices averaged 35.9 cents per pound for the year, compared with 25.1 cents in 1986.

Zinc

Higher domestic usage of zinc contained in galvanizing, die cast alloys, brass, and bronze applications led to a 6.1 percent increase in apparent zinc metal consumption in 1987. Old and new scrap zinc consumed last year jumped 12.6 percent while imports of zinc oxide and metal set new records. Higher exports were attributed to strong Taiwanese demand, which accounted for 86 percent of the export market. High Grade (HG) zinc metal prices in 1987 at 42 cents averaged 4 cents higher compared with 1986.

Iron and Steel

Buoyed by a second half 1987 spurt, steel shipments topped 76 million tons, the highest total since 1981. Steel production totaled 88.47 million tons, up 8.4 percent over 1986, while electric furnace production was up 9.6 percent to 37.7 percent of total production. As values for the higher grades of ferrous scrap rose to a 13-year high, scrap purchases increased 22.0 percent over 1986 and exports fell approximately 12 percent.

Stainless Steel

Demand for stainless steel literally boomed in 1987 as shipments for plate hit a record 160,000 tons, 10 percent above the previous peak registered in 1979. Worldwide tightness in nickel in 1987 propelled LME and domestic prices to levels not seen since the 1960s. Scrap demand responded strongly, increasing more than 21 percent for the year.

Waste Paper

With the U.S. economy still expanding, domestic metals and paper industries are finishing up another positive year. Here is a statistical summary of the success.