NEW YORK Prices for scrap aluminum wheels have fallen since the start of May as recent downturns on the London Metal Exchange coupled with greater supply have caused the wheel market to "soften slightly," sources say.
Free-market transaction tags for 356.1 wheels are at 86 to 89 cents per pound, down from 87 to 91 cents May 2, traders said.
"We are seeing prices in the mid- to high-80-cents range," one major wheel buyer said, adding that he was quoting roughly 2 to 3 cents lower than three weeks ago. "Availability seems to be improving and the LME is getting weaker. Prices will probably continue to fall until the LME shows improvement."
The cash primary aluminum contract on the London Metal Exchange ended the official session at $1,808 per tonne (82 cents per pound) May 28, down 1 percent from $1,814.50 per tonne (82.3 cents per pound) May 24.
"I have seen prices as high as 90 cents, but the consensus seems to be that wheels should be going for around 88 to 89 cents," a scrap trader said. "That number is largely a reflection of supply and demand, and right now there is plenty of supply."
Others said that recent tornadoes across much of the Midwest could strengthen wheel supply over the next few weeks.
"We can never be sure when material from major, weather-related incidents will hit the market," a second trader said. "Oftentimes, damaged cars have to be assessed by an insurance adjuster; it can sometimes take several weeks for a junk car to reach the scrapyard."
The weaker scrap market has led 356.1 alloy tags to fall during the past three weeks, with most producers putting sales at $1.09 to $1.11 per pound, down from $1.11 to $1.12 May 2.