Economic News Impacts Scrap Metal Markets

Recent economic news is mixed.

Scrap metal markets have improved, when compared month over month, yet prices are far from their all-time high during the first half of 2008.

US unemployment hovers around 10% and many geographic pockets indicate the number of unemployed and underemployed is much higher.  Unemployment is expected to get worse before it gets better --even with some seasonal hiring possible during the 4th quarter 2009.

Consumer spending and sentiment is flat as the wobbly good news from the stock market has not reached middle class USA. Over printing of the US dollar and huge borrowing by the US government is expected to hurt consumers even more as it will take more and more money to buy the same goods and services --headlong inflation for the foreseeable future.

Small business, the number one US job creator, is under extreme pressure and more are expected to fail --especially in the food and service industry.  Increased small business failures may not peak until the end of 1st Q 2010.  This flies in the face of National Federations of Small Business Owners (NFIB) new report of increased small business optimism.

Residential real estate values in the US are bumping along at what some economists hope is near bottom.  Stabilization of residential real estate prices is not expected as long as mortgage delinquency rates continue to grow.  Delinquencies could increase to as much as 5 or 6 percent by year end 2009.  Some US home owners have simply stopped making mortgage payments and are staying in their home awaiting foreclosure and eviction, which may prolong the weak housing market.

US commercial real estate is the big economic gorilla that has investors on the edge of their seat.  Consoling to some managers and owners is limited inventory.   European and US commercial real estate stability and possible recovery is expected to lag far behind growth economies such as China, India, Viet Nam, South Korea and Brazil.

World demand for scrap aluminum is decrease, while inventories remain somewhat level.  Demand for scrap copper remains within a narrow range even while inventories have increased slightly.  Growth economies continue to purchase scrap iron at sustainable prices through 2009.  A slow down may be on the early 2010 horizon in international markets.  US stimulus may finally reach national industries late 2009 or 2010 and cause increased US scrap metal demand.