European secondary aluminium prices flat as UK deliveries loom

European secondary aluminium prices were flat on Friday March 14, as exchange rates movements suggest a potential influx of UK material in the coming weeks.

DIN226 pressure diecasting ingot stayed at €1,690-1,740 ($2,352-2,422) per tonne, and margins remain razor-thin as scrap prices were also unchanged.

"There is no problem getting the right scrap, just not at the prices we need," a producer said. "The margins are still getting squeezed."

Producers are hoping for better margins ahead as they see greater pressure on scrap prices, which fell last week, than on ingot levels.

"Ingot prices are stable, but scrap is under pressure," a second producer said.

However, a stronger euro could soon reopen European markets to UK producers, who have been priced out of the market because of currency weakness thus far in 2014.

The euro was trading at £0.837 on Friday, from £0.820 at the end of February.

"There are better European prices and we've sold some ingots there this week," a UK producer said on Wednesday, adding that prices for UK sellers in Europe had risen by as much as £50 ($83.25) per tonne from the previous week.

Although some may fear that UK ingot offers into Europe could see prices fall and margins tighten further, most UK producers only have very small volumes to offer into the spot market as they are tied up fulfilling increased contract orders.

Instead, it could be that scrap prices fall as a result of the strengthening euro, with most of the secondary aluminium imports from the UK coming in the form of the raw material.

And ingot prices could also be boosted by higher demand from vehicle makers, which expect sales volumes to increase by 5-10% year-on-year in 2014.

"We already see that when we compare January and February to last year," the first producer said. "Volumes to auto companies were up 5% minimum."