CHICAGO Aluminum alloy
prices continue to slide despite stable physical demand, moving
in step with a large drop in primary metal on the London Metal
Exchange, market sources said.
AMMs price for
355.2 alloy has been cut to $1.28 per pound from $1.31 per
pound previously, and 356.2 alloy has been lowered to $1.23 per
pound from $1.26 per pound.
The price decline is a million
percent because of the LME, as prices for the alloys move with
tags on the exchange, one producer source said.
However, some scrap grades, such
as nonferrous auto shred (twitch), havent followed the
LME lower, he said, citing continued strong demand from
The cash aluminum contract ended
the LMEs official session at $1,943 per tonne March 5, up
1.5 percent from $1,914.50 March 1 but down 3 percent from the
Feb. 25 level of $2,004 per tonne.
The producer source suggested
that LME prices could reverse course closer to the third
Wednesday of the month, which is the prompt date for the March
contract. However, if that were to happen it would be the
result of financial players rather than any changes in business
activity, he said.
A second producer agreed that
prices had fallen due to what he described as a collapse in LME
"Were still busy," the
second producer source said, ticking off areas of solid demand
in the energy and automotive sectors. "But there is no
The second producer brushed
aside various theories put forward by other market players
about financial institutions being behind the dramatic downturn
in the LME, instead pointing to a host of other factors that
could be putting pressures on aluminum prices. The outcome of
recent elections in Italy, which has called into question the
future of austerity measures in the country, has strengthened
the U.S. dollar and, therefore, weakened all commodities priced
in dollars, including aluminum, he noted.
"Its automatic, like a
teeter-totter," he said. "If one goes up, the other has to come
Also weighing on aluminum prices
is uncertainty about the pace of Chinas growth and the
reliability of its economic statistics, the second producer
Meanwhile, demand and business
activity have been "OK" in the United States, but the
sequestration could blunt long-term demand for metals from key
end-users such as the U.S. military, he added.