UK aluminium scrap dealers release metal into market

Large scrap dealers in the UK have started offering material to customers that they had been holding back in the hope of pushing up prices, sources said on Wednesday October 16.

“Some people have been sitting on scrap, and it’s slowly but surely hitting them that it will get worse before it gets better,” a secondary aluminium ingot producer said. “We’re not struggling to find the material we need every week.”

UK scrap prices fell at the end of September and early this month, as unfavourable exchange-rate movements rendered most non-European export markets uncompetitive and low London Metal Exchange prices brought further pressure.

Those scrap dealers large enough to stomach it stopped selling scrap metal in hopes of higher prices to come, but with no indication of improvements in either export markets or LME prices, those dealers are now offering metal into the market.

“Scrap is not tight anymore – it’s not plentiful, but it’s balanced,” a scrap dealer said. “Some companies are legendary for sitting on material until they get what they want, but if they don’t think things will get any better then what’s the point?”

The approaching year-end has also prompted scrap dealers to go to market.

“Smelters stop taking deliveries in November, so you have to get scrap out now,” the dealer said. “And the LME is going nowhere.”

Several scrap prices fell further as pressure mounted on the downside. Commercial pure cuttings slipped to £970-1,010 ($1,549-1,613) per tonne from £980-1,030 per tonne; baled old rolled cuttings fell to £880-910 per tonne from £900-930 per tonne; and commercial cast reached £930-960 per tonne from £900-930 per tonne.

“We’ve seen a few major exporters ask if we’re interested in taking material,” a second ingot producer said. “Some people say there’s not much about, but I’m covering my needs easily.”

But scrap offers do not necessarily mean scrap sales. Dealers could be asking for prices to gauge the market rather than with a view to shifting volume at low prices. A third ingot producer said that he’d already been rebuffed by a scrap dealer that initially offered the metal.

“I’ve been offered a lot of wheels and some big parcels, but when I responded some responded back saying that they will wait for the price they need,” the third producer said.

Whether the offers do translate into sales from the larger scrap dealers will have a big effect on the supply and price of scrap throughout the fourth quarter.

Meanwhile, secondary aluminium ingot prices remained stable as UK business remains confined to previously agreed contract business.

LM24 pressure diecasting ingot continued to trade at £1,500-1,550 per tonne, while LM6/LM25 gravity diecasting ingot stayed at £1,710-1,750 per tonne.