NEW YORK Strong demand
from the auto and housing sectors has kept secondary aluminum
values on the raw material and finished product side afloat
despite continuing weakness in terminal markets.
A 2-cent-per-pound swing in
primary aluminum prices on the London Metal Exchange had little
impact on obsolete aluminum scrap consumed by alloy makers, who
in turn fought to keep alloy prices unchanged.
A weaker LME has had minimal
impact on scrap prices over the past few weeks as obsolete
scrap flows remain tight due to cold weather conditions and
weaker pricing in many parts of the country, market
Most alloy makers said A380.1
alloy continued to trade at $1.04 to $1.05 per pound March 18,
unchanged from March 14, although at least two sources reported
numbers that were up to a penny per pound higher.
The three-month North American
special aluminum alloy contract (Nasaac) closed at 83.7 cents
March 19, up from 83.5 cents March 14.
"(We are) still quoting and
selling small volumes at $1.06. I plan on holding out until
scrap gets cheaper or the lack of margins curtails my
competitions volumes. Still think something must give.
Demand is still excellent from contract customers. Spot buyers
seem to be keeping purchases tight (and are) not holding excess
inventory," a source at an alloy maker said.
Every producer contacted by
AMM said demand remains strong, but one source said
volumes slipped a little March 18 as some customers awaited
more direction from the terminal markets.
"I think some people are holding
off as they feel the market is going to drop, which is usually
the case in spring," he said.
Alloy demand from durable goods
manufacturers has also improved, some sources said.
Because A380.1 free-market alloy
is similar to the specification for Nasaac metal in LME
warehouses, a weaker Nasaac has brought some warehouse metal
into the open market, one source said.
Many producers said they have
chosen not to fight for that business, with one saying it had
shifted focus to 319.1 alloy production, which is in tight
"Margin is going to be the name
of the game this year. I know that we are not going to take
anymore low-/no-profit business. Obviously the 98-cent sales
(for A380.1) are not from secondaries, but people are pleading
with us to try and produce at that level or face bankruptcy.
There is nothing we can do but not sell them and watch as they
slide into oblivion," he said.
Sources at most alloy makers
said 356.1 alloy prices remained flat at $1.11 to $1.12 per
pound, although one seller disputed that level.
"Today, with the lower primary
prices, most distributors can purchase A356 (primary metal) at
$1.08 or $1.09 per pound delivered (for Russian metal).
Domestic is a penny or two more. Why would anyone wish to spend
$1.11 to $1.12 on (secondary 356.1)?" he asked.
A strong market for finished
products created some anomalies in industrial aluminum scrap
tags as consumers chased some grades more than others.
Primary scrap tags, which
typically trend in step with the LME, parted ways March 18
despite some weakening in primary aluminum prices.
Segregated 3105 low copper alloy
clips dropped to 81 and 83 cents per pound March 18, down 2
cents from March 14, while 5052 clips fell a penny to 90 to 92
cents per pound.
Meanwhile, mill-grade mixed low
copper clips were flat at 80 to 82 cents, while painted siding
inched up to 75 to 77 cents from 75 to 76 cents previously.
"Scrap supply remains tight and
the lower LME values are not translating into lower scrap
values, just more tightness on supply as dealers hold out for
the price they want," a producers scrap buyer said.
One supplier said scrap flows
have dropped significantly into dealer yards. "Scrap (volume)
is ... down month over month by approximately 10 to 13 percent.
Year over year its down by approximately 18 to 24
percent," he said. "Consumer demand is strong from both a
secondary and mill basis. We are seeing secondary prices
starting to eclipse mill prices in certain grades and pull
volume from the flat-rolled products area."