The spreads for aluminum mill scrap were mixed across grades, while prices for the material increased over the week for most categories.

 

The spread for mill-grade 1100 & 3003 clips tightened by 1.5¢/lb to 10.3¢/lb under the three-month LME aluminum contract on Tuesday while the weekly Davis Index for the grade increased by 1.6¢/lb to 62.1¢/lb delivered US consumer.

 

The spread for scrap 6063 was flat at 12.3¢/lb under the three-month LME aluminum contract, while the index for the grade increased by 1.7¢/lb to 61.7¢/lb delivered US consumer. The weekly spread for mill-grade MLC tightened to 23.4¢/lb, better by 2.5¢/lb, while the index for the grade increased by 2.6¢/lb to 49¢/lb delivered US consumer.

 

The spread for Litho sheet scrap was wider by 0.4¢/lb at 17.1¢/lb under the three-month LME aluminum contract while the Davis Index for Litho sheet decreased by 0.3¢/lb to 55.3¢/lb delivered US consumer on Tuesday.

 

LME aluminum prices have become volatile this past week, starting at $1,593/mt, and peaking at $1,638/mt on June 10. News of increased COVID-19 cases in states that were reopening created panic, causing LME aluminum prices to drop to $1,571/mt on Monday, June 15. 

 

However, the three-month LME aluminum contract rebounded on Tuesday to close at $1,596/mt, up $3/mt from last week’s close on June 9. The uptick was caused by news of states experiencing the increases in cases saying hospitalizations have remained low and that the new cases have been mild or are a result of more testing becoming available. 

 

Mill inventories and scrap supply will continue to play a more significant role in spot pricing versus spreads moving forward. Mills remain cautious about macroeconomic factors and the pace of the recovery, aiming to stay lean until demand stabilizes.  

 

P1020 aluminum could also become more expensive in the future as mills have looked to the grade to backfill short scrap inventories for either volume or quality concerns. The premiums for P1020A have been at historic lows in the 9¢/lb range. An investigation by the US government looking into the import of P1020A from Canada is also being considered, as it is harmful to US producers.

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