The mid-term elections in the USA are mostly finalized, with some interesting results. Given the state of the US economy and approval ratings of President Biden, it was expected that Democrats would lose both the Senate and the House of Representatives. In the end, Democrats will maintain their slim majority in the Senate but will give up their majority in the House of Representatives.
The gains on the Republican side were smaller than expected, so the finger-pointing began almost immediately. The anticipated red wave did not occur, so there are a lot of rumblings within the Republican caucus. Donald Trump has announced that he will be running for President for a third time in 2024. Others are lining up to run against him on the Republican side, while it is expected that Joe Biden will bid for a second term, setting up a repeat of 2020.
Domestic GDP surprised on the upside in the third quarter of 2022, returning to growth for the first time this year with a 2.6% increase. The US inflation rate is slowing a little, dropping to an annualized rate of 7.7% in October. The expectation is that the Federal Reserve will increase interest rates a little more, but at a much slower pace than previously this year.
True to form, US shoppers are in post-holiday mode. But the shopping has almost fully transitioned to online, with in-store shopping largely lacking this season. The USA is again awaiting a decision on an impending rail strike, as the previous resolution was not enough to satisfy all rail worker unions. Lastly, the real estate markets have slowed dramatically, pouring cold water on a very hot market.
The scrap markets are a bore right now, with range-bound terminal pricing. The regional US aluminum premium also seems to have found its spot, with little movement. Demand on the rolling mill and billet side is muted. Billet cast houses are particularly slow, with little to no spot scrap demand. Any needs are fulfilled at wider scrap spreads than have been seen for most of the year. Rolling mill scrap needs are also dull, with spot needs popping up here and there, and with similarly widened spreads; we suspect this is partially down to inventory reduction at the approach of the year-end and to uncertainty in the marketplace. Secondary smelter scrap needs among domestic producers are also muted, but scrap prices seem to have found the bottom. More export demand recently has stopped the fall in scrap pricing. Auto build rates are still poor and will not help scrap prices in the near term.
Copper scrap is in high demand both domestically and for export to Europe and Asia. Spreads are mostly unchanged.