US mill buying prices for used aluminum beverage can (UBCs) averaged a 16-month high of 56¢/lb delivered in October as hopes of impending stimulus boosted LME settlements and a tight trucking market made shipping scrap costly.
Argus prices for used beverage cans delivered US mill averaged 56¢/lb in the first two weeks of the month, or their highest level since June 2019.
October's prices represent a significant recovery from April's 46.6¢/lb average, or the lowest since the great financial crisis.
UBCs trade at a moving discount to the delivered Midwest US price of P1020 aluminum, so any changes in physical premiums or LME settlements are reflected in scrap pricing.
April's crash in US can prices took place under pressure from some of the lowest LME settlements since 2009, as economies around the world shuttered industrial capacity to prevent the spread of the virus. As primary metal prices fell, so did scrap. Over the last six months as most economies were able to reopen after the first wave of Covid-19 and commodities regained their footing, prices for scrap metal like cans have increased.
Buying spreads reflected as a percentage of the P1020 Midwest transaction price have normalized in October at pre-Covid-19 levels of approximately 60pc, meaning mills can now acquire scrap at historically normal ratios of new aluminum pricing. This is down from May's 21-month high average of 65pc.
During the worst throes of Covid-19-related shutdowns, scrap collection at the yard level slowed and supply tightened, all while at-home beverage consumption surged, increasing demand for can sheet.
Mills pay percentages closer to the price of new aluminum when they are having difficulty sourcing enough raw material, resulting in higher cent per pound pricing and more cooperation from dealers which will sometimes sit on bails of cans for months at a time.
In 2018, the US recycled 1.67bn lbs of aluminum cans, a 64pc recycling rate of the total can shipments, or 2.62bn lbs, according to data from the Aluminum Association.
The average aluminum can contains 70pc recycled metal, according to the Aluminum Association. Excluding yield loss because of melting and processing, aluminum scrap can be recycled indefinitely.
