Global trading house Trafigura eyes US aluminum scrap market

Global trading house Trafigura AG/Nems (USA) Inc. is considering an entry into the U.S. secondary aluminum market, market sources said.

To date, Trafigura’s only known involvement has been as a trader of the London Metal Exchange's North American special aluminum alloy contract (Nasaac), a secondary aluminum alloy that is similar to the free-market A380.1 specification alloy, largely used in the automotive sector.

However, some sources suggest that Trafigura is now considering participation in the aluminum scrap market, although it is still unclear whether this would entail taking physical positions on scrap for later trading or acquiring scrap for conversion into ingot.

A Trafigura spokesman declined to comment, but a source familiar with the development said the company is looking at different possibilities in aluminum scrap.

One secondary aluminum alloy trader claimed that Trafigura has approached some secondary aluminum smelters for furnace time.

Some sources who had yet to hear of Trafigura's potential participation in the aluminum scrap market added that at current scrap and ingot price levels, tolling wouldn't be viable.

One secondary aluminum producer noted that it wouldn't be surprising if Trafigura tried to enter the scrap market. "If this happens, expect a continued tightness in the scrap market and look for higher prices, which will eventually drive alloy prices higher," he said.