European secondary aluminium prices go up despite LME fall

European secondary aluminium ingot notched up higher prices on Friday June 14, as producers secured higher prices even as London Metal Exchange aluminium prices faltered during the last week.

Earlier, DIN226 pressure diecasting ingot prices increased to €1,740-1,780 ($2,778-2,838) per tonne from €1,730-1,800, though usually ingot prices dip as the LME prices fall.

On June 13, three-month aluminium settled at $1,855.5/856 per tonne, after ticking at $1,968/68.5 per tonne last week.

Aluminium prices rose as the consumers following media reports on the loss-making operations of ingot producers and the imminent curtailment in operation led the consumers for long term purchases of the material. “Consumers have low stocks and have been buying hand-to-mouth to grab the lowest prices,” a producer in Northern Europe said. “Now they are hearing that there may be problems, and are covering whole quarters again.”

According to a second producer, based in the south of the continent, consumers are now focusing on securitization of the material further ahead, due to problems arising from lack of profitability among manufacturers.

“A lot of balance sheets are now public and there are companies with huge losses,” he said. “Clients are now going for longer sales.”

Two weeks ago some producers averted business below €1,800 per tonne to counter the lack of any margin in ingot production. The following week the LME strengthened and helped those sellers maintain higher prices, and those prices have survived lower LME prices this week.

Scrap prices were stable in the week, as scrap dealers preferred holding material rather than sell at lower prices due to the LME decrease.

“It’s not easy to find the scrap quantities we need at acceptable prices,” a third producer said. “We are having a fight with scrap dealers again.”