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Deox prices flat; better margins sought

Keywords: Tags  aluminum deox, deoxidized aluminum, LME, aluminum scrap, scrap prices, Nathan Laliberte

NEW YORK — Prices for deoxidized aluminum were relatively flat in February, with market participants telling AMM that tightness in scrap coupled with lower quotes from steel mills continued to present significant headwinds for maintaining profitability.

Most producers logged sales at 99 cents to $1.01 per pound in February, with some sources telling AMM they can no longer give in to price pressure from the mills, even if it means exiting the market.

"Nobody is happy with those numbers. Nobody is making any money. Scrap is just too high; at some point, we will just have to hold the line," one deox producer said.

"The market is unbelievably tight and demand at the steel mills is decent. However, pricing is relatively unchanged, which makes things really difficult to make margin," a second producer said.

"When the market is reasonable, we will participate. When it’s not, we just back out," a third producer noted.

Despite major price drops on the London Metal Exchange, scrap grades used for producing deox—namely old sheet—haven’t weakened in step with other grades, a fourth producer indicated. "With scrap being as high as it is, we are still getting pinched on sale prices. It just shows how much the mills are squeezing," he said.

"Scrap guys are charging the max and steel guys want the cheapest price possible," a fifth producer said. "We’re getting whacked on both ends."

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