The spreads for aluminum mill scrap delivered US mill widened across most grades, while prices for the material increased over the week. 

 

The spread for mill-grade 1100 & 3003 clips widened by 0.4¢/lb to 11.8¢/lb under the three-month LME aluminum contract on Tuesday while the weekly Davis Index for the grade increased by 1.7¢/lb to 60.5¢/lb delivered US consumer.

 

The spread for scrap 6063 was wider by 2.9¢/lb to 12.3¢/lb under the three-month LME aluminum contract, while the index for the grade increased by 2.2¢/lb to 60¢/lb delivered US consumer. The weekly spread for mill-grade MLC widened to 26.6¢/lb, worse by 1.6¢/lb, while the index for the grade decreased by 0.3¢/lb to 46.4¢/lb delivered US consumer.

 

The spread for Litho sheet scrap was tighter by 0.3¢/lb at 16.7¢/lb under the three-month LME aluminum contract while the Davis Index for Litho sheet increased by 0.7¢/lb to 55.6¢/lb delivered US consumer on Tuesday.

 

The LME aluminum price hit another high point this week since the pandemic forced the market to its 2020 low of $1,459.5/mt in early April. The three-month LME contract closed on Tuesday at $1,593/mt, up by $64/mt from $1,529/mt on June 2.

 

Mill inventory is playing a role in how the market reacts to LME aluminum’s strength. As the LME market moves higher, spreads should become wider against current demand. In some cases, mills looking for specific grades are signaling a recovery, but it is not robust enough yet to influence the entire aluminum scrap portfolio. The rate of change on the LME is also partly responsible for spreads widening over the week.  With a 5pc increase in the three-month LME aluminum price over the week, deals fell behind as soon as they are concluded, causing the spreads to widen.

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