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United States

Inflationary pressures were expected to subside in June but surprised on the upside, with the annualized rate rising to 9.1%. Costs for rent, groceries and gasoline all increased in June, although gas prices are currently trending downwards and should allow for some relief in the coming months. The ongoing increase in costs will force the Federal Reserve to continue with rate increases and overall tightening of money supply to the US economy.

The unemployment rate has stayed low at 3.6%, with job supply still healthy. The dollar has shown strength and has been in parity with the Euro for the first time in 20 years.

US aluminium producers are adding yet more new capacity to increase their consumption of sustainable recycled materials. Many of these are greenfield operations entailing multi-billion-dollar investments. Major capacity increases have been announced for both auto sheet and can sheet production, with the intention to utilize recycled content raw material. The larger question under debate is from where all of these metal units are going to come. Part of the solution will likely be to improve the scrap quality for these mills. On that note, we are seeing partnerships arise with sortation contractors and the mills to supply mill-ready sorted recycled content. 

On the downside, two primary aluminium producers have announced curtailments or full closures. Lower pricing has made higher-cost producers uneconomical to run right now as they battle elevated energy costs. 

Metal prices have been in a tailspin with no relief in sight, and no expectation that the situation will reverse and move higher anytime soon. The all-in primary aluminium price has dropped 20% since the previous Mirror report in May, with the regional premium accounting for more than US$ 220 per tonne of that decrease. Rolling mill and billet scrap demand has slackened slightly and spreads have widened a little. Secondary aluminium ingot has held up much better, dropping less than 5% in the last few months. Standard high-volume die cast alloys are well above primary prices, with the higher-end alloys almost 50% above primary aluminium. We may see a slow decay of secondary alloy prices as the summer doldrums are with us, and we are still suffering from poor automotive production owing to labour and supply chain issues. In recent weeks, there have been large decreases in demand and pricing for secondary aluminium scrap items. Given the lack of demand and lower scrap prices, alloy prices are expected to fall shortly. As copper prices have dropped, we have not seen much change in spreads or demand, both of which are stable. 

Export orders exist for secondary aluminium but prices are very low. There is little competition for units and so it is unlikely prices will run up in the near term. Ocean freight rates are coming down a little and availability is slightly improved. Regional congestion issues at ports are still complicating export markets. Copper units are moving well into Europe and Asia, with spreads stable in line with drastically reduced terminal markets.