Nonferrous

SQUEEZED IN THE MIDDLE

Caught in the balancing act of procuring enough aluminum scrap to keep operating, and keeping prices low on their finished product to compete, makers of secondary aluminum ingot continue to be squeezed by tight margins.

“The scrap is out there,” says one aluminum buyer, “but the pricing is rather ugly right now. The price of our finished product is depressed right now, so it’s hard to buy scrap at a low enough price to have any margin.”

The scrap buyer says, “As long as mill-grade scrap commands higher prices, the dealers are selling that and holding onto the secondary scrap, waiting for buyers to offer the right price.”

The situation is not fun for secondary aluminum ingot and shot makers. “We get hurt on the buying end and the selling end. We get squeezed on both sides.”

“Usually this involves a lagging situation,” says the buyer. “Secondary lags behind the primary; if it goes up for the primaries, the secondary prices may rise in time. Usually, the ingot prices will go up a little bit firsts. The producers will realize that it’s not cost-effective and will stop selling at a lower price just to gain volume.”

For now, though, aluminum prices are still trying to catch up with where they were before a fairly drastic drop in April.

“As the situation is now, everyone cuts everyone else’s throat just to make sales and to get volume.”