Aluminum scrap markets continue to suffer from an overabundance of supply and little spot market interest, with one Midwest-based processor of postindustrial material saying, “‘Soft’ is a nice way” to describe the market as of mid-July.

“Aluminums have been very challenging,” the processor says. “Secondary demand is not great, and pricing is horrible.”

He says sales into billet producers and extruders have been particularly slow, though he’s not sure whether this is because of an abundance of cheap, foreign material or because these consumers are reducing their production to respond to demand.

He adds that aluminum ingot makers are seeing their pricing collapse and are trying to keep their inventories as low as possible as a result.

As many other sources have indicated recently, the Midwest-based processor says the large volume of automotive sheet scrap continues to disrupt the market. “Auto sheet production is shoving a lot of scrap into the domestic market.

“Things change all the time and will change on a dime,” the processor says of scrap markets, but he adds that he’s not expecting any changes any time soon.

“Some of the fundamentals are just different. Auto sheet is one of the bigger factors. Because of the mixture, it’s not a great item for anybody.”

The processor says he’s worried that slowing auto sales will further erode pricing. If the downward trend that has been established over the first half of 2019 continues, total car sales in the U.S. might fall below 17 million by year-end, according to an article in Automotive News.

“After six monthly declines to start the year, the industry is down 2.4 percent halfway through 2019,” the Automotive News article notes. “It’s on pace to finish at slightly more than 16.9 million, which would be the first time shy of 17 million since 2014.”

“I’m a little concerned things may slow down on the secondary side and beat things up even worse,” the scrap processor says.

“Some of the fundamentals are just different. Auto sheet is one of the bigger factors. Because of the mixture, it’s not a great item for anybody.” – a Midwest-based processor

While he says he was expecting activity to slow in June, volumes at his yard increased compared with May. July volumes are lower, the processor says, because of the holiday and production downtime related to model-year changeovers in the automotive sector.

Scrap processors and brokers might take some comfort in recent news from China. That country announced a second round of scrap quota approvals July 10, according to a report from Argus Media, totaling nearly 437,000 metric tons for delivery in the third quarter.

China Solid Waste and Chemicals Management, a Chinese environmental ministry division, approved 124,450 metric tons of copper scrap, 306,930 metric tons of aluminum scrap and 5,500 metric tons of ferrous scrap for delivery to ports in south, southeast and north China, the article notes.

“The copper quota is below volumes of copper scrap imported in the third quarter of 2018. By contrast, the aluminum quota has already exceeded the deliveries in the same quarter last year,” Argus Media reports.