A380 producers fighting price pressure

Secondary aluminium alloy prices remained relatively steady over the past week, although a number of market participants said they had heard rumors of sellers beginning to give in to downward price pressure.

“The automotive guys are still running hard despite prices being relatively stagnant over the past months,” one seller of A380.1 told Metal Bulletin sister title AMM. “Why people would be lowering [the] price on A380 is beyond me, because the scrap picture hasn’t changed.”

Consumers have been “aggressively testing the low end of the market,” a second seller said, pegging quotes as low as $1 per pound. “We have not given in to that type of price pressure [...] It just doesn’t make sense for us to have to go that low.”

A third seller noted that doing deals below $1.01 per pound is a losing proposition in the current market. “Let’s look at facts: it takes 79 cents to get shred,” he said. “If you take 79 and divide by 90 (percent of recovery) you get 87.7 cents. On top of that you have to add 2 cents for copper and silicon. By now you are at a 90-cent metal cost and you are going to ship it to a customer for another 2.5 cents. Unless you can operate a plant on 7 cents, you are going to be losing money if you are selling at anything below $1.01 or $1.02 per pound. It’s that simple.”

Meanwhile, prices for mill-grade aluminium scrap fell in step with weakening London Metal Exchange prices.

Prices for 5052 segregated low-copper alloy clips fell to 83 to 85 cents per pound Sept. 23 from 84 to 86 cents previously, 3105 clips moved to 75 to 77 cents from 76 to 78 cents, mixed low-copper alloy clips fell to 72 to 74 cents from 73 to 75 cents and painted siding weakened to 70 to 72 cents from 71 to 73 cents per pound.

Smelter-grade aluminium scrap remained mostly steady, as sellers indicated prices could rise in the coming weeks as mill demand picks up.

“This time a year we usually start to see a bit of a slowdown, with quarter-end and year-end,” a fourth seller said. “I thought I was seeing a little bit of that, but it seems that some mills have really turned the faucet on in terms of buying.”

Prices for aluminium used beverage cans (UBCs) moved down to 67 to 69 cents per pound from 68 to 70 cents previously, and aluminium-copper radiators fell to $1.60 to $1.65 per pound from $1.62 to $1.67 in step with copper’s downward movement on Comex.

The LME’s cash primary aluminium contract ended the official session at $1,754.50 per tonne (79.6 cents per pound) Sept. 23, down 1.6% from $1,783.50 per tonne (80.9 cents per pound) Sept. 19. The price slipped further Sept. 24, ending the official session at $1,753.50 per tonne (79.5 cents per pound).

The Comex copper contract for December, the most actively traded, settled at $3.2565 per pound Tuesday, down 1% from $3.2985 per pound a day earlier.

All other secondary grades were unchanged.