Metal Bulletin’s UK secondary aluminium ingot prices fell sharply on Wednesday February 12, after spot business was reported substantially lower than the contract deals to which activity has been mostly confined this year.

LM24 pressure diecasting ingot fell to £1,420-1,480 ($2,333-2,432) per tonne from £1,460-1,510 previously, while LM6/LM25 gravity diecasting ingot reached £1,600-1,650 per tonne from £1,650-1,700.

“Spot ingot prices are way below the current range,” a producer said on Wednesday. “A couple of UK guys, that don’t have [contract] orders, are walking away because UK prices are too low.”

Contracted deals are those agreed between a seller and a buyer that comprise set volumes of material being delivered over a certain time period at a fixed price.

Many are priced off the MB spot range.

When spot business dried up at the end of last year, contracted tonnages kept moving at around those prices over the year-end and into 2014. With no spot business to speak of throughout January, prices stagnated.

LM24 ingot was trading at £1,480-1,530 throughout December and January, while LM6/LM25 ingot traded at £1,670-1,710 from December 11 until last week.

As spot market deal started re-emerging, however, it became clear that prices were well below levels seen at the end of 2013.

“Contract prices are holding, but spot is cheaper because the market is relaxing,” a second producer said. “Prices are nowhere near as good as a few months ago.”

The main driver for falling spot prices is the influence of the European market. The UK is an export market, and is vulnerable to currency rate fluctuations as a result. A weak euro has crippled UK exports into the eurozone this year, and that trend has been exacerbated by falling prices in euro terms.

“Europe is not looking good. There is a lot of demand, but prices are not comparing the UK,” a third producer said. “It’s not the market to be in at the moment. It’s a bit of a bloodbath if you have to do large chunks into Europe.”

With European markets all but closed, most UK producers have been confining operations to the service of their contracts.

Aluminium scrap prices were broadly stable on Wednesday after falling a week earlier.Baled old rolled cuttings rose to £870-900 per tonne from £850-880 previously, with only off-spec material reported at the lower numbers. Additionally, cast wheels – the only scrap grade not to fall a week ago – dipped to £1,020-1,060 per tonne from £1,030-1,080.

Jethro Wookey
Twitter: @jethrowookey_mb