Metal Trading
Metal has been fundamental in the progression of industry and transportation in our society since the discovery of copper thousands of years ago. The hundreds of metals present in our lives today are used everywhere in our everyday life for countless purposes. The metals that are traded can be grouped in to the following categories: minerals, ferrous metals (cast iron, steels, and stainless steel), non-ferrous metals (precious metals, base metals and minor metals), ferroalloys and noble alloys.
As a trading commodity, volumes of metal have continually expanded on the back of an increased interest in commodity trading and an expanding range of products available to trade.
This is one of Redstone Commodity Search’s key areas of focus with the founder of our company working with our key clientele. Redstone has made a large number of placements which are detailed below and under the specific metal products. Recent work includes:
- Head of Metal Trading, United Kingdom
- Head of Metal Traffic Team, Switzerland
- Head of Proprietary Trading, United States
- Head of Metal Sales, Netherlands
- Trading Manager (Aluminium and Copper), China
- Contracts Administration Manager, Singapore
- Head of Metals Research, United Kingdom
What Is The Difference Between Minerals And Metals?
Minerals are naturally occurring, inorganic, solid substances with a definite chemical composition. An ore is a rock that contains minerals in concentrations high enough for economical extraction. The ores are refined to obtain the metals.
In short, rocks contain minerals which are called ores when there is a large concentration of the mineral, and these are mined for metals.
Mining Minerals
We are able to excavate minerals from the earth through mining. The first stage of mining is the discovery of the ore body through techniques such as geological and satellite surveys. The estimated value of the deposit is estimated and then funding is sourced based on whether it is economically viable to excavate. The final stage before mining is the development of the mine by sourcing the relevant equipment and transport and upgrading the local infrastructure if necessary.
Once mined, metals need to be extracted from their natural mineral deposits; this process is known as mineral processing or ore dressing. The ore will usually be sold domestically or exported to a refiner for this.
The commercially valuable concentrate is separated from any unwanted impurity by either grinding the host rock to a powder and/or a combination of several mechanical and chemical techniques. During this process, metals usually bind with other elements to create compounds (also called ores) due to their reactivity.
Some metal elements will more readily combine with other elements than others. Usually, the more reactive a metal is, the harder it is to remove from its ore, and the more expensive it is to process.
The final stage of the process is the refining stage. Refining processes fall into two basic types: pyrometallurgical (dry) and hydrometallurgical (wet); smelting falls in to the pyrometallurgical type. Impurities are removed and the metal is converted into a state which allows the fabrication of the end product; this is refined metal. The metal is now ready to be sold to the market as an end product and will either be shipped to a warehouse or its final customer.
Ferrous Metals (Cast Iron, Steel, Stainless Steel)
In essence, ferrous metals are those which contain iron. Iron is the world’s most commonly used metal; iron ore is the key ingredient of steel which represents 95% of all metal used per year. Iron ore is in demand globally for structural engineering applications, maritime purposes, automobile manufacturing and industrial machinery. Mining iron is a high volume low margin business and requires significant investment in infrastructure in order to transport the iron ore. Iron ore production is concentrated in the hands of a few major players. The largest producers of iron ore are in Brazil, China and Australia. China is currently the largest consumer of iron ore, consequently, it is the world’s largest steel producing country (read more about steel trading).
Both cast iron and steel are created by combining iron with carbon. When the carbon content in iron is between 2.5-4 per cent, it makes it cast iron; less than 2 per cent carbon content makes is steel. Cast iron is cheaper than steel, has a low melting point and can be moulded in to any form or shape as it does not shrink when the temperature drops. It is, however, more brittle and breaks more easily than steel.
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Chromium is added to carbon steel to create stainless steel. The chromium makes the steel rust and stain-resistant. Examples of stainless steel use include cutlery and sinks. As the steel industry is so large and varied, most traders and sales managers specialise in specific steel products.
Non-Ferrous Metals
We can categorise the non-ferrous metals in to three subgroups, precious metals, base metals and minor metals.
Precious Metals refer to gold, silver, and the platinum group metals (PGM: platinum, palladium, rhodium, iridium, osmium and ruthenium.) Gold being such a dense, stable element – air, heat, moisture and most solvents do not alter it – means that the vast majority of all gold ever mined is still in existence. London has always been an important centre for dealings in gold due to its long-standing ties with South Africa.
Physical gold trading involves either holding small bars of gold, which is popular in Asia, the Middle East and the Far East, or buying gold bullion (bars or ingots) for investment purposes, which is more common in European countries. China is the world’s largest producer of gold; it produces 15 per cent, and Asia as a whole produces 22 per cent. Africa produces 20 per cent; Central and South America produce 17 per cent; North America accounts for 15 per cent and the former Soviet Union C.I.S. region contributes 14 per cent.
Silver is often found with other elements and therefore is mined in conjunction with zinc, lead, or copper. It is therefore regularly mined as a by-product. Mexico remains the world’s largest silver producer, followed by China, Peru, Australia and Chile. Although significantly less expensive than gold, silver maintains a sufficiently high value-to-weight ratio. Like gold, it is possible to buy as bullions, bars and coins. As it is so often mined as a by-product, any factor, which affects for example, copper production, can have a knock on effect on the price of silver.
Platinum and palladium are produced mainly in South Africa, Russia, Zimbabwe, the US and Canada. Although platinum is even rarer than gold it is traded for a lower price. It is used as jewellery but it is also an industrial metal used in electronics and catalytic converters in cars, trucks and buses, making it reliant on motor industry demand. Other industrial minerals in this group include iridium (alloys, contacts in spark plugs), rhodium, osmium and ruthenium. They have similar physical and chemical properties and tend to occur in the same mineral deposits. They are traded by industry specialists.
Base metals are common metals which are not considered precious. For the most past, they are industrial commodities. This group includes aluminium/aluminum (read more), copper, lead, nickel, tin and zinc. The market for base metals plays a fundamental role in the world economy – they are mined and traded globally and are used widely in commercial and industrial applications such as construction, vehicle manufacturing, shipbuilding, domestic appliances and food packaging.
The minor metals group includes antimony, cadmium, chromium, cobalt, magnesium, manganese, silicon, titanium, tungsten, vanadium, and zirconium. Traditionally, minor metals referred to those metals not traded on formal exchanges due to their relatively low production or specialist applications (filaments in lightbulbs, electronic pastes, and components in small electrical gadgets) compared to the base metals, however the London Metal Exchange (LME) now also trades cobalt and molybdenum.
Ferroalloys and Noble Ferroalloys
Alloys consisting of iron with a high proportion of one or more other chemical elements are referred to as ferroalloys (more about ferroalloys). They are one of the most important inputs in the manufacture of alloys and special steel. The principal ferroalloys are of chromium, manganese and silicon (i.e. ferrochromium, ferrochrome, ferromanganese, silicon manganese and ferrosilicon).
Noble ferroalloys include ferronickel, ferrovanadium, ferrotitanium, ferrotungsten, ferro-boron, ferro-niobium, and ferro-phosphorus. More than 85% of ferroalloys produced are used primarily in the steel manufacturing industry. Using ferroalloys in the iron and steel industry is the most economical way to introduce an alloying element in the steel melt.
Scrap Metal
Scrap metal is recyclable materials left over from product manufacturing and consumption. Both ferrous and non-ferrous metals can be traded as scrap metal. It originates in both business and residential environments but unlike waste, it has monetary value. Services will also often offer their services to remove scrap metal.
Collected scrap is taken to a scrapyard (junkyard), where it is processed for selling to smelters who will melt the metal and transform it into new products. This process is called secondary smelting and refining. More often than not, scrap is sold by weight rather than as individual objects. Ferrous materials are usually less expensive as they are generally in good supply. Non-ferrous scrap is relatively harder to come by and more difficult to create. This makes the demand higher and consequently drives up the price.
Recycling metal is not only beneficial to the environment but can be economically advantageous to metal producers as there is a reduction in the energy used to produce new metal and in the raw materials used. The biggest exporters of scrap metal are the EU, the US and Japan, followed by Russia and Canada.
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