Aluminium scrap stays steady in Europe after UK falls

Aluminium scrap prices in Europe stayed flat on Friday October 4 even after falling in the UK market over the past two weeks, and secondary aluminium producer margins remain under pressure.

“There have been some small reductions in scrap prices but nothing significant,” a producer said.

UK scrap prices have fallen over the last two weeks as unfavourable exchange rate movements have rendered most non-European export markets uncompetitive.

Weakness in India’s rupee and the US dollar in particular has savaged export rates.

But on the continent, prices have remained stable as both supply and demand have flattened.

“Scrap continues to be very strong compared to London Metal Exchange prices,” a second producer said. “There has been no drop in scrap prices.”

Ingot prices were also stable on Friday, at €1,780-1,840 per tonne ($2,422-2,503), with producers in the main refusing deals below €1,800 per tonne.

“We’re fighting to stay above €1,800, but it’s getting more complicated,” a third producer said.

With good volumes already booked for the fourth quarter, many producers are in a position of being able to turn business down.

“We’re fully booked for the fourth quarter; volumes are good and stable,” the third producer said. “There’s no need to sell, so we’ll only sell above €1,800.”

With no reduction in scrap prices, producers have little choice but to hold out for higher numbers.

“Most producers want more than €1,800, and nothing below that,” the second producer said. “Less than €1,800 would still make a better margin than at the start of the year, but it’s still not enough to cover the scrap.”

While the margin over scrap prices acts as a floor on ingot prices, the low LME prices remain their ceiling.