Welcome to the new year! Here’s to making 2025 a bigger and better one! Before we get into current aluminum news, let's take a quick look back at 2024. Last year had its fair share of challenges with ever-escalating scrap spreads and physical scrap tightness. And while all scrap grades saw spreads tighten, the below graphic depicts how the various primary market segments differed from each other. On average, pricing increased ~5% over the previous 12 months but without a doubt, scrap items used as cansheet inputs saw the greatest increases. UBC saw a 25% increase and is rapidly approaching levels at which its cheaper for consumers to melt prime and hardeners. With such dramatic swings in pricing and physical tightness, market participants are gravitating toward quarterly deals in 2025 as mills don’t love the spreads they have to pay currently and suppliers have PTSD from what transpired last year.
2024 Scrap Pricing Changes (as a Percent of MWT)
EC | 1100/ 3003 | 5052 | 6063 Bare | UBC | MLC | Old Sheet | Siding | |
Jan. 2024 | 86.0% | 84.1% | 87.7% | 84.6% | 63.5% | 65.3% | 62.0% | 66.0% |
Dec. 2024 | 91.0% | 89.2% | 91.8% | 89.0% | 79.5% | 74.3% | 64.5% | 75.7% |
2024 Change | 5.0% | 5.2% | 4.0% | 4.4% | 16.0% | 8.9% | 2.5% | 9.7% |
Percent Increase | 5.8% | 6.2% | 4.6% | 5.2% | 25.3% | 13.6% | 4.0% | 14.7% |
All-in aluminum pricing remained level in December starting and ending the month at $1.3750, finding peaks and valleys that stayed within 3c of those endpoints. Despite the static nature of aluminum pricing, we’ve been seeing weakness on the LME side (down $40/ton in Dec) and strength in the premium (which has risen 2c over the same time). I anticipate those trends to persist in January as global aluminum demand remains muted and primary aluminum production continues to reach record highs placing excess aluminum in the marketplace. Furthermore, the recent alumina squeeze, discussed in this column a couple months back, has eased and we’ve seen a 15% correction in alumina pricing as supply disruptions normalize. The premium has been buoyed by president-elect Trump’s threat of a 25% tariff on all products from Canada and Mexico but the current pricing still factors in the prevailing belief that these will fail to come to fruition. If they did, we could see Midwest Premium levels nearly double what they are today.
If you recall, the port strike which occurred back in Oct, was punted out to January 15 and is bearing down on us. As it currently stands, wage increases have been tentatively agreed to provided the two sides can find common ground on the issue of port automation. Recent rumbling, however, doesn’t sound optimistic. The two sides are set to return to the bargaining table on Jan 7, leaving just 8 days to hammer out an agreement and avoid another work stoppage. This threat of a strike, coupled with concerns from overseas consumers of tariff wars when Trump takes office on Monday, January 20th has dramatically slowed aluminum export activity. One thing is for sure, January is going to be a busy month!
Please contact me with feedback, ideas for future topics, or offerings on aluminum scrap. I can be reached at 440-813-6325 or michael.anderson@schupan.com.
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