Aluminium scrap shortage: Panic growing among European aluminium alloy producers
The aluminium scrap shortage panic has grown among the European aluminium alloy producers as they envisaged their pricing levels onwards the resumption of some automotive operations this week.
As manufacturers like Volvo and Volkswagen has declared a restricted resumption of their facilities last week, significantly the alloy producers have countered by planning returns of their own.
A Western European-based alloy producer said: "We restarted some production on 20th April’20, to deliver to the auto companies that have restarted. We will have a clearer picture by mid-May. We do not yet know if we will be at 50% capacity or 80% or even 100%."
Europe's automotive plants remain closed mostly, but any further resumption will bring a prompt response from alloy producers.
Another Eastern-European based producer said: "We are waiting for our clients to restart — 95% of them are in the automotive industry. There is still no market at the moment, and no enquiries."
A German-based producer stated: "If I offer DIN226 alloy, the basis for the price calculation is scrap prices over the last three weeks, but there are no scrap prices now. We have some stock, but no deals. There is no basis for a price calculation."
As most of the manufacturing units are idled through-out the past month, there has been little production scrap coming back into circulation from those operations. Major European scrap suppliers stopped taking third-party deliveries last month, while the lack of automotive production will lead to less material from scrapping coming onto the market.
An Italy based alloy producer added: "Scrap is the biggest issue. The lockdowns have dramatically lowered the generation of new scrap. No one is offering, and it is very hard to buy."
This can result to a gloomy aluminium alloys price picture the moment the business picks back up and the demand levels remain unclear, as original equipment manufacturers that buy from alloy producers and sell to automotive manufacturers often carry ample stocks, so higher demand from automakers might not immediately translate into higher alloy demand.
The primary aluminium prices have dropped throughout the COVID-19 pandemic as producers continue to operate smelters against low demand and as investors become discouraged by the oil price slump. But if scrap supply cannot meet even diminished demand levels, alloy prices will have to rise.
A producer from Eastern-Europe said: “If ingot demand is half of what it was, but you have a quarter of the scrap supply, prices will go up.”
News Source From AlCircle
