Weekly US buying spreads for mill and extrusion grade scrap widened across the board on Tuesday as buyers countered the spike in the LME market over the past week.
The official LME Aluminium cash price settled Tuesday at $2,518.50/mt ($1.142/lb), up by $143/mt from Jun 22.
The LME cash price is less than 2¢/lb off this year’s peak in May over uncertainty following Russia’s announced export tax on aluminum and China’s auction of the material in July. On the other hand, most rolling mills have filled their inventory and aren’t buying scrap at the moment. A labor shortage in the aluminum industry is also impacting spreads. Buyers at the mills are trying to pay as little for scrap that has led to spreads widening this week.
The weekly Davis Index spread for A356 wheels widened by 4.5¢/lb to 41.9¢/lb under Midwest while transaction prices for the grade rose by 1.6¢/lb to 99.9¢/lb delivered. Market participants noted that this grade has been most affected by the semiconductor shortage since it is directly related to the auto market.
Meanwhile, the spread for mill-grade MLC widened by 3.2¢/lb to 53.1¢/lb under the Midwest transaction price. Outright prices for the grade stood at 88.7¢/lb delivered US consumer, up by 3.3¢/lb. The spread for painted siding also weakened by 4.7¢/lb to 56.9¢/lb under Midwest. Spreads for 6063 new bare extrusion scrap widened by 2.7¢/lb to 13.1¢/lb under Midwest. Transaction prices settled at $1.287/lb delivered, increasing by 3.4¢/lb.
Freight prices continue to impact the scrap market. A regional disparity in trucking costs has led to most companies buying loads from nearby yards. Moreover, the purchasing department at most mills is now busy tracking down its shipments to end Q2, hence all scrap being bought now is post-dated by at least a month or two.