US secondary aluminum commentary: Alloys, scrap post more gains

US secondary aluminum alloy prices posted further gains on Thursday following several cent increases in London Metal Exchange aluminum prices and scrap prices. A380 secondary alloy rose half a cent on the high end to 1.10-1.12/lb, delivered Midwest, while 319 and 356 prices were up 1-2 cents at $1.13-1.16 and $1.22-1.24, respectively. One producer reported a quote on A380 as high as $1.14, but others said $1.12 was the highest they were able to achieve. With an LME NASAAC price of more than $1.06, selling into the contract is a viable option, said producers. Despite the higher NASAAC price, a producer bought some metal back from NASAAC and resold it into the market. "Things are really slow now," said a broker who sold at $1.11. "No one wants to react when the price rises 5 cents. I have no extra metal right now for November." He said, "I can see why some would quote at $1.14. If they get it, great. If not, no big deal."

The broker said despite diecasters not looking for supplies, the tightness in supplies is exacerbated by Arkansas Aluminum Alloys being in the market for ingot. AAA has been buying its ingot needs to supply its customers from its competitors following an October 31 explosion. The cause of the explosion is still unknown, although Roger Curtis, vice president of sales, said there was nothing to indicate it was process related. Curtis said AAA still did not expect to declare force majeure but was not soliciting any new business for December. Producers said higher input costs remain a negative factor. Silicon prices had been rising steadily but have leveled off at 88-90 cents/lb, delivered Midwest. That iss up from 2006 contract prices of 70-72 cents. One producer said diecasters had thought the alloy market would drop, "but it didn't, so they are going to get squeezed, and they will have trouble buying metal."

However, one producer said he has seen good activity from his automotive transplant and electrical customers, but suspected some of that might be inventory building ahead of the holidays. He said there may then be longer shutdown for Christmas. He said his November and December were pretty well closed off. "I would offer $1.12, but I don't have any metal," he said. One diecaaster said he was on a fishing expedition to see where prices are at for December. Some scrap items saw an increase this week to 74-76 cents/lb on old sheet (up a penny) and to 76-77 cents on turnings (up 1-2 cents). A buyer said that scrap remains tight.