UK aluminium scrap market moves into balance

UK secondary aluminium prices were broadly stable on Wednesday October 23, while scrap moved into balance after dealers started offering more material to the market last week.

LM6/LM25 gravity diecasting ingot edged down to £1,700-1,740 ($2,748-2,813) per tonne from £1,710-1,750 previously, but all other ingot and scrap prices stayed flat.

“The market has stabilised and people have got to grips with the amount of supply coming in,” a trader said. “It’s more manageable. Two weeks ago scrap was tight and demand was worse, but the market is more fluid now.”

Ingot producers reported fewer phone calls from scrap suppliers this week, after dealers in the UK started offering material last week that they had been holding back in the hope of pushing up prices.

“Scrap has gone a bit quiet, and not a lot is being offered this week,” a producer said. “We could do with a few more offers – we’re stocktaking next week but I need some stuff to come back to.”

A scrap dealer said that he saw the market as being in balance.

“Supply is firm; there is plenty coming through the door,” the scrap dealer said. “Industrial production [of scrap] is pretty healthy, and it’s all pretty balanced.”

Most scrap buyers reported little difficulty securing the tonnages they need, but few are buying in large volumes yet.

“We’ve not bought a great deal of scrap, but we’re not struggling to buy what we want,” a second producer said.

A third producer said that scrap prices could well rise towards the end of the year as buyers look to secure material for their January operations while scrap dealers become less inclined to move material as the year-end approaches.

“People will try to push stocks up in the fourth quarter so that they are able to satisfy demand when they come back in January,” the third producer said.

Scrap prices could also come under pressure if and when exchange rate movements reverse.

“With the dollar at 1.62 to the sterling it is very difficult for anything to leave Europe,” the third producer said. “If it was at 1.52 scrap prices would be significantly higher.”