- Elevated freight costs weigh on imported scrap trade
- Seasonal demand recovery may support prices in near term
India’s imported aluminium scrap prices mostly declined w-o-w, despite firmer LME aluminium prices, as cautious buying outweighed support from relatively tight scrap availability.
According to BigMint’s latest assessment for CFR Nhava Sheva deliveries, US-origin Tense 6-7% scrap prices declined by $45/t w-o-w to $2,495/t from $2,540/t. Meanwhile, UK-origin Zorba 95-5 scrap prices decreased by $10/t w-o-w to $2,720/t from $2,730/t amid limited trading activity.
LME aluminium prices rise w-o-w
Three-month aluminium prices on the London Metal Exchange (LME) increased by $47/t, or 1.5% w-o-w, closing at $3,253/t on 1 September, compared with $3,207/t on 25 August. Prices gained amid improving Chinese manufacturing activity, expectations of a seasonal recovery in demand, and continued inventory drawdowns, while relatively tight exchange stocks provided additional support.
Meanwhile, LME aluminium inventories declined marginally by 200 t, or 0.08% w-o-w, to 246,725 t on 28 August from 246,925 t on 24 August. Stocks remained near multi-year lows, continuing to provide underlying support to aluminium prices amid tight exchange availability.
Market scenario
The global imported aluminium scrap market remained subdued this week, with trading activity largely muted amid LME aluminium price volatility and uncertainty over the near-term price direction. Buyers continued to adopt a cautious approach, limiting purchases to immediate requirements, while sellers remained hesitant to release fresh offers. Global availability of aluminium wheel scrap remained tight, keeping premium levels supported. Meanwhile, EU-origin trading stayed subdued as market participants awaited next month’s decision on the proposed 15% export levy on aluminium scrap.
In India, imported aluminium scrap trading remained particularly slow over the past few days. Only a few deals were reported for HRB Taint Tabor 2-3%, while activity for Tense and Zorba remained limited. Market participants continued to exercise caution amid uncertainty over near-term price movements, resulting in restrained buying interest.
Meanwhile, Asia-US container freights edged higher this week and remained elevated at their highest levels since mid-2022, amid severe congestion at East Asian ports and weather-related disruptions. More than 4.3 million TEU of container capacity is currently waiting to berth globally. Freights stood at $6,300-7,500/FEU for the US West Coast and $8,200-10,500/FEU for the East Coast, adding to cost pressures for scrap exporters and importers.
In contrast, India’s domestic aluminium tense scrap market has started to show signs of improvement, supported by increased market activity. Demand from end users is expected to strengthen from September as imported ADC12 inventories decline, encouraging buyers to replenish alloy stocks. This could provide further support to domestic tense scrap demand in the coming weeks.
Outlook
India’s imported aluminium scrap market is expected to remain largely stable in the near term, with buying likely to stay cautious amid uncertainty over price direction and elevated freight costs. However, relatively tight global availability of aluminium wheel scrap and low LME inventories could provide a floor to prices. In India, improving end-user activity and declining imported ADC12 inventories may support domestic scrap demand from September, potentially lending firmness to prices.
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