UK secondary aluminium prices reach record-highs on unprecedented scrap costs

Prices for secondary aluminium ingot in the UK reached new all-time highs in the week to Wednesday March 9 on increased demand and unprecedented prices for scrap grades across the country

Fastmarkets assessed the price for aluminium scrap LM24 pressure diecasting ingot, delivered consumers UK, at £2,300-2,450 ($3,015-3,212) per tonne on March 9, up from £2,200-2,300 per tonne the previous week and the highest figure recorded since Fastmarkets began assessing this price in 2002.

“There’s such massive shortages of ingot in the UK,” one trader in the region said. “I’m getting requests that I can’t fulfil with domestic stock, so I’m having to bring over [aluminium grade] 226 [ingot] from Rotterdam to offer in the UK market.”

Surging scrap prices and high energy costs in the UK have forced ingot offers higher across the board, with some primary scrap grades achieving a premium to the LME price on the back of tight supply of raw materials and higher export interest, following the disruption to supply chains caused by Russia’s invasion of Ukraine.

Fastmarkets assessed the price for aluminium scrap group 1 pure 99% & litho, delivered consumer UK, at £2,400-2,500 per tonne on March 9, up from £2,300-2,400 per tonne the previous week and, again, the highest level since Fastmarkets began covering the market in 1995.

“With scrap prices rising the way they are, we can’t even break even unless we raise our offers,” a second producer said. “It’s not like we’re increasing our margin - the margin is staying the same - it’s just the underlying costs that are rising.”

Prices for higher grade ingots were also up, and Fastmarkets assessed the price of aluminium scrap LM6/LM25 gravity diecasting ingot, delivered consumer UK, at £3,000-3,200 per tonne on Wednesday, up by 68% from the corresponding time last year and the highest level ever recorded for this grade.

“The market has moved so fast with the worry about supply and availability of scrap and ingot… and price levels have moved significantly. Even with the drop in the LME yesterday, everyone is very bullish,” a third producer said. “With little or no spare capacity in the primaries, and a high LME price, high-grade alloy and scrap [prices] have moved up.”

The LME aluminium cash price was most recently at $3,532 per tonne on March 9, after exceeding $3,980 per tonne earlier in the week. It began the year at $2,815 per tonne.

“I have never known a time like this for price volatility,” a fourth ingot producer told Fastmarkets. “The LME was well over £3,000 per tonne but has now dropped back to £2,700 per tonne. Gas prices have gone crazy and scrap is really tight, with all grades seriously in demand.”

Some market participants were starting to raise concerns about how sustainable the relentless price increases could be, however.

“Everyone is predicting a massive crash. It’s just a matter of time. I’m trying to back-to-back every deal because I simply cannot afford to take too much risk,” the first trader said.

“The real question is who runs out of money first?” the second trader said. “All our credit limits are squeezed and the rises are unsustainable.”

To keep up with aluminium price trends throughout 2022, visit our base metals page.

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