European aluminium alloy moves sideways on lower LME, scrap

Secondary aluminium alloy 226 prices moved sideways in Europe this week as lower LME and scrap prices meant consumers negotiated cheaper deals, sources said.

Trading was quiet because many key players were still away on holiday, and a clearer picture was expected to emerge in the coming weeks. A German consumer was understood to have purchased 2,000 mt of Hungarian 226 alloy at Eur1,820/mt ($2,594/mt) FD for October delivery, market sources said.

"I heard a Southern German buyer bought some alloy, not 226 grade, but if it were converted it would work out at Eur1,810/mt FD," said a seller.

"We haven't done anything at this level [Eur1,810-1,820/mt]," said a German producer, who added he had sold some truck loads this week at Eur1,870/mt FD Germany.

One consumer said that the push towards Eur1,900/mt did not appear to be "working" and that Eur1,850/mt, or even lower, seemed to be where the market was moving.

The majority of sales were still reported at the Eur1,850-1,860/mt FD Germany level.

The Platts physical alloy price assessment moved down Eur20/mt this week to Eur1,820-1,870/mt delivered Germany, but was still Eur60/mt above the low so far in 2011 of Eur1,760-1,810/mt FD hit on June 16.

Some larger consumers were expected to enter the market for fourth-quarter requirements next week and this would provide the market with a clearer indication of prices, said a trade source.

Prices should go down [from where they are now] by about Eur50-100/mt because of lower primary aluminium prices on the LME," said a buyer, who conceded that because scrap was in tight supply the price reduction would probably be less.

The LME official cash settlement price for aluminium alloy was set at $2,360/mt Thursday, up $110 from $2,250/mt a week earlier, and was almost $30 higher than $2,331/mt four weeks earlier on August 4.