European secondary aluminium prices edge higher on lack of imports

European secondary aluminium ingot prices edged up on Friday June 6, as the relative lack of UK material on the continent led to a tightening of supply.

DIN226 pressure diecasting ingot rose to €1,680-1,740 ($2,286-2,368) per tonne from €1,670-1,730 previously, as the strong sterling continued to restrict imports into Europe from the UK.

Demand is very strong in Europe, particularly from the auto sector, but prices have been flat for much of the year so far because supply levels have been so high. But with less UK material being exported to Europe, producers on the continent are seeing more of that demand and thus selling more of their output.

"The ingot market is coming up a bit on the high utilisation of our capacity," a producer said. "Our capacity is now all booked up for the next month and others are finding the same."

Negotiations for third-quarter material have also aided sentiment, with many large consumers in the market over the last two weeks.

Additionally, London Metal Exchange aluminium prices have held above $1,800 per tonne, which suggests higher ingot and aluminium scrap prices.

Metal Bulletin's European scrap prices were stable on Friday, but some pure grades of scrap have been getting more expensive on the back of both the LME price increase and the attentions of large primary aluminium companies such as Novelis, which is boosting its usage of recycled metal.

"The problem is still the scrap," a second producer said. "It's generally stable but there are signs of an increase, especially on the purer grades. Sheet and wheels are now higher."

As long as ingot supply from the UK into Europe is restricted by the strong sterling, ingot producers in Europe should be able to pass on any scrap price increases far more easily than if the exchange rate allowed for the easy importing of UK material.