NEW YORK Prices for aluminum smelters scrap were mostly steady April 3, with market participants noting that an increase in the domestic supply of nonferrous auto shreds twitch and zorba had prevented tags from moving in step with primary aluminum increases on the London Metal Exchange.
The uptick in supply is largely the result of recent economic issues in China (amm.com, March 26), which prompted Chinese importers to postpone shipments and reduce price quotes, sources said.
"The secondary market has stopped following the LME because shreds are flooding the market," one scrap trader told AMM. "We are seeing the secondaries draw a line in the sand and not chase after material because they know they dont have to."
The uptick in nonferrous shred supply encouraged some producers to lower ingot prices by about half a penny, a source at one major alloy producer said. "Apparently, some guys are dropping prices just because twitch has tanked. Twitch is only about 10 percent of our feed. With that said, we cant be raising prices on other grades of scrap if ingot prices are showing some weakness."
A second producer source said he had begun to test the lower end of the scrap market. "We are going for lower scrap prices because of the twitch situation," he said. "By and large, though, we are mostly able to buy at last weeks levels."
Twitch prices were unchanged April 3, although market players warned that if China continues to show muted interest in zorba, a lower-grade nonferrous auto shred, then prices for twitch could fall further.
"There is a huge lack of direction in the industry right now," a third producer source said. "Some people are saying that they are seeing lower ingot prices and higher scrap prices. Others seem to think that the market is flat, with no change on either side. Until people come to a conclusion about what is really happening with China, I think the market will remain divided."
The third producer source noted that he had left his ingot prices unchanged from the previous week, adding that "demand remains extremely brisk."
The LMEs primary aluminum cash contract ended the official session April 4 at $1,810 per tonne (82.1 cents per pound), up 4.6 percent from $1,730.50 per tonne (78.5 cents per pound) March 31.