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

The weekly Davis Index for A380.1 fell by 0.5¢/lb to $1.165/lb delivered US consumer as the secondary smelter industry reeled from the impact of the semiconductor shortage. 


Meanwhile, silicon-intensive secondary ingot prices surged on high input costs. Smelters that make grades like 413.1, B390, and 356.1, which use high-grade aluminum scrap, were forced to pay high prices to compete with rolling mills. With the LME and Midwest Transaction price soaring over the past month, the cost of scrap has increased by 20pc. Availability and cost of secondary sows remains tight and most buyers are struggling to keep prices competitive. 


The index for A356.1 rose by 3.9¢/lb to $1.355/lb delivered US consumer. A413.1 jumped by 9.8¢/lb to $1.36/lb delivered while A360.1 climbed by 4.5¢/lb to $1.313/lb delivered. The index for 319.1 inched up by 2.6¢/lb to $1.27/lb delivered. 


Labor shortages and freight costs are negatively impacting operations and margin levels for secondary smelters and straining production capacities. According to recent estimates, there are now 30,000 fewer truck drivers available in the US since 2020.


The semiconductor shortage is seen as a negative trend to the industry, but some producers consider it a boon since market supply already lags demand, and this gap would have been much larger if the auto industry were operating at full scale. 


Producers, however, acknowledge the slowdown in sales due to production cuts at the Big Three auto plants in the US, where most alloys are now being used to build high-margin, bestselling SUVs and pickup trucks. Besides, demand outside the auto industry continues to grow at an unprecedented pace. 


The official LME Aluminium cash price settled Friday at $2,403/mt ($1.089/lb), down by $115.5/mt from May 14.

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