NEW YORK Prices for deoxidized aluminum, or deox, recovered further in December, building on gains that began in November following a seven-month skid.
Prices were hovering around 92.5 to 94.5 cents per pound in December, most producers said, up from 91 to 93 cents at the end of November.
The market picked up slightly in November (amm.com, Dec. 4) after drifting as low as 89.5 cents per pound for Octobers end-of-month sales. The November uptick ended a descent that began in April (amm.com, April 3).
As in past months, prices fell at the end of the month, with most market participants reporting an average sales price of around 92 cents per pound during the last week of December.
There are several factors contributing to the uptick, including a tightness of scrap due to a recent blast of winter weather across much of the country and increased demand from steel sheet mills that are ramping up for a very strong first quarter, primarily in the automotive sheet market, producers said.
"It was a very interesting market this month," one major deox producer told AMM. "Weve finally bottomed out. We averaged out at the 93.5-cent rangeabout 1 or 2 cents above last months price. We also heard some sales at the end of the month in the 92-cent range."
Sheet mills are beginning to offer a premium for fast deliveryoften a sign that scrap is becoming somewhat scarce, producers said. "We are selling at 95 (cents) spot, but that might be largely attributable to weather," the deox producer added.
Most sources believe prices for deox will return to a 94- to 95-cent range by the beginning of February. The anticipated price adjustment is largely attributable to continued demand from mills producing material for the automotive sector.
"The mills focused on automotive in particular are running full out," a second producer said. "They are drawing the deox into production faster than they can fill the bins."
A third producer said that he was able to sell material on a non-discount basis for the first time in several months. "We sold, made some money and didnt participate in any discounts," but there are "still people willing to sell way below the market," he said.
"I dont get it; scrap is tight, dealers are holding metal waiting for the market to go up, automotive production is skyrocketing and there are still people willing to sell at rock-bottom prices," he said.
Deox aluminum, which is used as a deoxidant in steelmaking, is usually produced in shot, 2- and 4-ounce cones and pyramids, and 5-pound notchbar. On average, deox is made from about 95-percent aluminum, 1.5-percent copper, 1.5-percent zinc and 1-percent magnesium.