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

Prices for US secondary aluminum smelter scrap increased over the past week adding to the sales margin pressure for secondary aluminum smelters. Scrap prices are rising at a faster rate than ingot prices at present—a scenario that is all too familiar with secondary smelters.


The weekly Davis Index for all the aluminum shredder grades delivered US consumers were stronger on Wednesday, with Tweak gaining the most ground and moving up by 1.1¢/lb to settle at 43.3¢/lb delivered US consumer. Zorba rose by half-a-penny to 42¢/lb delivered, while Twitch increased by 0.6¢/lb to 48¢/lb delivered. 


Offers for Twitch were as high as 50¢/lb, with no confirmed sales. Although Davis Index confirmed sales made at the 49¢/lb-level, they did not carry enough volume to push the index higher. Offers, however, seem to be finding littler resistance from smelters creating the expectation of better pricing in the near-term.


The index for Old Cast increased by 1.1¢/lb to41.6¢/lb delivered US consumer on Wednesday, and the index for Old Sheet inched up by 0.4¢/lb to 41.5¢/lb delivered. The Davis Index for high-grade turnings increased by 0.9¢/lb to 36¢/lb delivered and moved up by 0.4¢/lb for mixed turnings to 30.9¢/lb delivered.


The three-month LME aluminum contract closed at $1,783.50/mt, down by $6/mt from $1,789.50/mt on August 12.


Excess capacity remains an issue for secondary smelters who are eager to conduct business. Discounts on ingot are prevalent in the market at present as opposed to during the peak of the COVID-19 pandemic, where discounts were not applicable since no one was buying secondary alloys. The tables have turned now, and alloy producers are feeling the pressure to opt between making some margin or none at all.

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