Secondary alloys firm in USA despite fall in scrap prices

Secondary aluminium alloys were mostly stable on March 27 as sources said the market held strong despite notable drops in some aluminium scrap grades, including twitch, a nonferrous auto shred and a key component in alloy output.

Twitch prices fell to 81 to 82 cents per lb from 82 to 84 cents, market players told Metal Bulletin sister title AMM, attributing the weakness in part to upticks in zorba supply due to falling international demand, particularly from China.

But alloy producers said lower raw material costs have yet to impact secondary alloys, primarily due to spiking demand from the auto sector and higher shipping costs.

"I sold two loads of A380.1 yesterday at $1.09 [per lb]," one major alloy producer said. "The demand level is strong."

The producer added that increases in the London Metal Exchange's North American special aluminium alloy contract (Nasaac) could make demand for "producer metal" even greater. "I am trying to understand the recent rise in Nasaac," he said.

"I would imagine Nasaac is pretty pricey today as compared with the smelters price, unless the traders are taking less for a premium? Really don't think that's the case, so demand for producer metal should be strong, keeping the price up."

The Nasaac cash contract closed the LME's official session at $1,975 per tonne on March 28, up 4.8 percent from $1,885 per tonne on March 24.