Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

The Davis Index for P1020A and 6063 billet premiums delivered US Midwest were marginally better compared with the past two weeks.  Both increased, but around one-tenth of a cent. 


News of the US investigating Canada for its primary aluminum sales failed to take hold in the market to any real extent leaving premiums facing the challenge that most producers have become accustomed too—excess capacity.


The weekly Davis Index premium for P1020A was higher by 0.1¢/lb at 9.1¢/lb delivered US Midwest, under the three-month LME aluminum contract. The index for 6063 billet premiums was better by the same 0.1¢/lb at 6.1¢/lb delivered US Midwest under the same LME aluminum contract.


The three-month LME aluminum contract closed on Monday, $1,695/mt up by $69/mt from $1,626/mt on July 6.


Sales activity remains sluggish compared to pre-pandemic levels. However, secondary smelters have mentioned looking to the primary market if needed, as aluminum scrap has tightened over the past week with the Chinese re-entering the markets with over 200,00mt of aluminum quotas to fill. 


If secondary smelters do turn to the primary markets to backfill both tonnages and chemistry, primary producers’ ability to push premiums higher will get a boost. However, this is not a long-term strategy for secondary smelters who would need to offset the extra cost of primary aluminum purchases, which is not an easy task to take in today’s tight scrap environment and the razor-thin margins on secondary aluminum alloys.

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