Viewpoint: Zorba rallies into 2021

Global zorba prices in the first quarter will be determined by a mix of strong southeast Asia demand and base metal exchange prices, countered by potentially larger supply of the shredded nonferrous byproduct, as surging ferrous scrap pricing brings more cars and light iron to shredders.

US buying prices for zorba 95/2 rose to 67-69¢/lb delivered in the third week of December, a new high since Argus began assessing them in late 2018. US fas east and west cost export prices for 99/3 quality zorba are trading at 74-76¢/lb, also their highest levels since 2018 when Argus' price history began.

Lackluster US ferrous scrap prices up until December have been a drag on shredder feed inflows, in turn generating less zorba. A $70-90/grosse tonne (gt) increase in December ferrous trade and potential for a similar jump in January could make a significant difference in zorba supply if there are enough shreddable scrap items being stacked up by wreckers, dealers and peddlers. The higher prices should draw out more light iron and cars, but this will take at least a few weeks and some market participants doubt there is much surplus to be coaxed out.

The price-boosting effect of modest zorba supply has also been compounded by a strong export market.

Southeast Asian demand for zorba, taint/tabor and tense has been high since late July as China's inability to take in its normal volume of zorba this year has constrained its alloy output. Satellite smelters outside of the country have attempted to pick up some of the slack.

On 1 November, China adopted a new specification for zorba that removed import quotas for any material that meets a high-quality bar. But as of late December, other than sales to Hong Kong, few global shredders have shipped anything directly into Chinese ports. And with the approaching lunar new year, if China does not begin buying normally again, it may be some time before it returns to the market and has a palpable impact on global zorba pricing again.

Any large-scale return would force US, European, Indian and southeast Asian consumers to compete and raise bids for high-grade zorba, boosting prices globally, but the date of that return remains murky. So far, in the last month of the year, Malaysia, Indonesia and Thailand remain the major drivers of the global zorba market.

Base metal exchange prices have also been a supportive factor in late 2020 to the strong zorba market and will play a significant role in determining how far the rally continues into 2021.

LME aluminum closed the third week of December near a two-year high of $2,049/t, while Comex copper settled at a 94-month high of $3.6285/lb. High copper prices allow zorba buyers to make extra money out of picked red metal items contained in zorba, justifying higher bids from consumers and firm offers from shredders.

By John Betz