Aluminum scrap continues to enjoy strong demand as of mid-February, with one trader who’s based in the Midwest saying primary mills are actively buying on the spot market. He says that is different than in the recent past, when these mills purchased much of their scrap based on contracts.
He attributes the increased spot buying in part to primary mills determining that the spreads in recent years did not make it advantageous to engage in contracts. “Demand is pretty strong as well,” he adds.
The trader says even secondary mills are offering more for aluminum scrap. “That tells me housing starts and automotive are strong,” he says.
One potential concern for aluminum producers and the scrap dealers who supply them is the automotive production problems that have arisen because of the semiconductor shortage. In 2020, the automotive industry experienced fluctuations in production and demand related to the pandemic, reducing its