Scrap aluminium prices dip reflecting falling LME prices

As the LME aluminium prices fall and the buying activity lessens among the primary metal companies, the UK pure-grade aluminium scrap prices were also seen falling on Wednesday January 7.

Commercial pure cutting which was £1,100-1,160 per tonne previously, fell to £1,020-1,100 per tonne. In the other two categories, that is, the group 1 99% & litho and clean HE9 extrusions, there was a dip noticed with prices slipping to £1,200-£1,260 from £1,230-1,280. Trade was also low across the three bands as only a handful of deals were finalized.

The prices for the pure-grade scarp had risen quite strongly late last year as many primary producers turned to recycled metal for feedstock and the scrap suppliers reported large shipments to top aluminium producers like Norsk Hydro, Novelis and Sapa.

However, those shipments are not due to be delivered in the beginning of 2015. These deliveries have been postponed to April, May or June.

The three-month aluminium LME price has also fallen to $1,790.5/791 per tonne on Wednesday which is the lowest it has been since May last year.

Usually the supply of scrap becomes tight during this time of the year as scrap collection becomes difficult during the harsh winters and also because the primary producers by now already build up a fair stockpile to ensure they suffer no constraint in supply.

This year the atmosphere is more relaxed as the weather is mild and the primary producers are not panicking about supply limitation just yet. However, if the LME price rises, the scrap prices should also rise as the producers double up their efforts to collect more scrap as feedstock.