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European secondary Al market offers no relief on producer margins

Monday, Feb 18, 2013

European secondary aluminium ingot prices rose on Friday February 15, though producer margins remained under severe pressure as scrap prices also increased.

“The scrap issue is really tough, and some companies are having financial difficulties,” a producer said.

“The margins are so low that companies are burning cash every day, and the risk is that they will stop producing because they don’t have enough money to buy scrap.”

DIN226 pressure-diecasting ingot rose to €1,720-1,790 ($2,303-2,397) per tonne, from €1,700-1,780 previously.

Producers mostly reported prices above €1,750 per tonne, but there are still lower offers in the market from aggressive sellers.

“When I ask for material, there are always two or three producers offering high prices of around €1,770, and two or three on a lower level around €1,710 or €1,720,” a diecaster said.

Demand is steady in most European nations, with the impetus for higher prices coming from sharp increases in scrap raw material prices.

“Prices in the ingot market have recovered a bit, but it’s mainly because of the scrap prices,” a second producer said.

Mixed turnings rose to €1,200-1,270 per tonne from €1,180-1,230 previously, while cast reached €1,270-1,350 per tonne from €1,250-1,330.

“Scrap supply is very tight, which is normal in winter,” a third producer said. “But we’re getting to the point where it’s threatening [ingot] sales.”

In the UK market, scrap supply is so tight that some producers are struggling to find scrap at almost any price. In Europe the availability is a little better, but prices are still far above what would offer producers a reasonable margin.

“I don’t believe we’re in a situation where there is not enough scrap, but it’s a question of whether the producers can earn money or not,” the diecaster said.

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