Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Prices for US secondary aluminum smelter scrap pushed higher during the week as market activity increased and some smelters closed in on normal production levels. 


However, increased production levels have brought higher price expectations from scrap dealers for their offerings, forcing some smelters to part with their margins to get the material they need to melt.


The weekly Davis Index for aluminum shredder grades for Twitch and Zorba were stronger on Wednesday, with Tweak holding the line at 38.2¢/lb delivered US smelter. The index for Twitch moved up by 0.4¢/lb to 44¢/lb delivered and for Zorba, it rose by 1.1¢/lb to 37.5¢/lb delivered.


The index for Old Cast and Old Sheet increased by 0.3¢/lb to 36.3¢/lb delivered US smelters and 37.3¢/lb delivered, respectively. 


The Davis Index for secondary MLC inched up by 0.4¢/lb to 41.8¢/lb delivered US smelter and decreased by 0.3¢/lb to 37.5¢/lb delivered smelters for painted siding.


The three-month LME aluminum contract closed at $1,651/mt, up by $37/mt from $1,614/mt on July 1.


The overall market sentiment was more positive this week. Scrap generation is more robust as the economy wakes up, but not all the newly generated material ends up with smelters. Some scrap dealers are willing to hold on to their material in the near term in anticipation of making up for lost revenues and profits.  


Automotive sales flatlined from May to June. They are forecasted to be only slightly better for Q3 2020 and down 35pc from 2019. These results could place secondary smelter back in the tough position of paying more for scrap but not getting the price they would like for finished secondary alloys.

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