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Rise in aluminum scrap demand buoys prices

Keywords: Tags  aluminum scrap, LME, Midwest premium, scrap prices, aluminum prices, primary aluminum, aluminum premium, Nathan Laliberte

NEW YORK — Prices for most grades of secondary aluminum smelters’ scrap moved higher Jan. 6 as an increase in post-holiday demand coupled with a slight decrease in supply helped buoy the market, participants told AMM.

The drop in supply was largely attributed to the bitterly cold weather across much of the country.

The price uptick ran counter to recent declines on the London Metal Exchange, where the cash primary aluminum contract ended the official session Jan. 6 at $1,717.50 per tonne (77.9 cents per pound), down 2.2 percent from $1,755.50 per tonne (79.6 cents per pound) Jan 2. The contract recovered slightly Jan. 7, closing the official session at $1,733 per tonne (78.6 cents per pound).

Market talk of possible changes in the Midwest premium caused some participants to express confusion over current market conditions and overall sentiment.

"Interesting market today," one scrap trader told AMM. "The LME drops, but we are hearing the premium is moving higher. I don’t understand it."

One scrap seller noted that word of possible premium increases "has caused some confusion on the scrap side. I am not sure if all consumers are going to follow the premium jump up."

Meanwhile, prices for secondary aluminum alloys were steady Jan. 6, with buyers and sellers noting that demand had remained steady through the holiday season and into the new year.

The recent cold snap could disrupt the flow of material and delay production schedules, a source at one Midwest alloy producer said. "I’ve gotten a few calls this morning for extra metal. ... (I’m) wondering if the northern smelters are being impacted by the weather."

A "modest warming trend" should make its way to a large part of the Northeast by Jan. 8, according to the National Weather Service.

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