Margins diminish further in European secondary aluminium

European secondary aluminium ingot prices remained stable on Friday March 2, but rising scrap prices piled yet more pressure of producers struggling with tight margins.

"Ingot prices are still within last week's ranges, but scrap is going up," an ingot producer said. "Scrap merchants have reacted very quickly to higher London Metal Exchange prices. Every day we have to put some more euros onto the scrap prices."

DIN226 pressure diecasting ingot stayed at 1,800-1,860 ($2,399-2,479) per tonne, with business booked across the range.

"We're trying to book at the top of the range, but there are still some suppliers selling at 1,800," the producer said.

"Ingot prices are not where they should be if you look at the LME and at scrap prices," a second producer said. "Scrap is just really, really tight, and the margins are so squeezed."

Floated frag rose to 1,380-1,450 per tonne from 1,350-1,400 previously; cast climbed to 1,280-1,380 per tonne from 1,250-1,330; and mixed turnings reached 1,150-1,230 per tonne from 1,130-1,200.

Scrap dealers are quick to raise prices on any significant upward move in LME aluminium prices, which contributes to the short-term nature of the market.

"We can't buy scrap at a fixed price beyond about two months," a third producer said. "As a result, we cannot accept business longer than mid-May. It's too dangerous."

Scrap prices have not only risen in response to higher LME aluminium prices, but also because demand is increasing in international markets and prices there are good enough to claim some material that would otherwise have been sold in Europe.

"Everyone is crying out for scrap, but the scrapyards are empty," the second producer said.