Scrap aluminum wheel prices in line with LME

Scrap aluminum wheel prices have moved back in line with those on the London Metal Exchange after trading at a premium for much of the year, with one trader claiming that the recent surge on the LME has boosted availability.

Free-market transaction prices for wheels are now in the range of 96 to 98 cents per pound, traders said, with one consumer noting that he won’t budge from his quoted price of 95 cents per pound.

The LME aluminum cash contract closed the official session at $2,153 per tonne (97.7 cents per pound) Tuesday. Wheels have previously traded at a premium of up to 6 cents per pound to the LME cash price (amm.com, June 26), although traders told AMM Tuesday that sellers have been unsuccessful in pushing for $1 per pound and upward.

"That’s their dream number. ... I know one guy that’s been holding on to them since last fall, saying he’s not going to sell until he gets that number," a second consumer said.

"They might ask for that, but nobody’s paying," the first consumer said.

Wheels were trading at a premium for several months primarily because strong demand kept prices stable while the LME plunged earlier this year (amm.com, May 9). That is no longer the case, with the LME returning to levels not seen since March.

The LME’s rise has also increased availability, the first consumer added.

"People aren’t chasing as hard as a few weeks back. I think the LME increase brought a few more (wheels) out and demand has not increased," he said.

However, one broker believes demand for the 356.1 alloy from the automotive sector is set to grow in the coming months.

"There’s an anticipation of that 356.1 alloy being in demand," he said.