NEW YORK Prices for secondary smelters aluminum scrap rose March 6, with sources noting that the market was being buoyed by a recent supply crimp that was largely caused by weather-related issues.
Most grades of smelters scrap moved up about a penny, according to market participants, in step with an upward trek on the London Metal Exchange.
The primary aluminum cash contract ended the LMEs official session at $1,732 per tonne (78.6 cents per pound) March 6, up 3.4 percent from $1,674.50 per tonne (76 cents per pound) March 3. The contract lost a little ground Friday, though, finishing the session at $1,729.50 per tonne (78.5 cents per pound).
Despite the increases, sources pointed to a number of factors that could reverse the trend over the next few weeks.
Export numbers, especially to China, are really weak, one trader said. If that situation persists, we will see a big uptick in domestic supply.
Chinas lack of interest in material is directly related to currency devaluation in China, one analyst told AMM, adding that insiders believe that officials within the Chinese government are intentionally manipulating the currency market (amm.com, March 5) in an effort to prevent hot moneycash used for currency speculationfrom entering the country.
Chinese buyers are widening spreads as the market falls and really not showing any interest in material at this point, one seller said. We have yet to see any knock-on effects for scrap, but as the weather improves, domestic supply could really see huge increases if China remains out of the picture.