1. The LME Cash Price Is the Starting Point
Almost every legitimate aluminum scrap quotation in Europe is anchored to the LME cash settlement for primary aluminum (Aluminium High Grade, P1020A). The LME cash price represents the spot value of refined aluminum ingots delivered to LME-approved warehouses, and it moves continuously during London trading hours.
Scrap, by definition, contains alloying elements, paint, oils, moisture and other materials that must be removed or accounted for during remelting. Because the smelter has to invest energy and yield loss to recover usable metal, scrap always trades at a discount to LME. That discount is expressed either as a percentage (e.g. 'Tense at 88% LME CIF Nhava Sheva') or as a flat differential (e.g. 'LME minus USD 350/MT').
2. Grade Discount Bands
The cleaner and more uniform the scrap, the higher the percentage of LME a buyer will pay. Sorted extrusions from a single 6063 billet supplier command very different numbers than mixed loose UBC bales picked up from municipal recyclers. The table below shows realistic 2026 trading bands observed at Rotterdam loading.
These are reference bands, not firm offers — actual numbers shift with smelter demand in Asia, container freight rates and the LME curve. Buyers should always request a fresh quote dated to the day of booking.
3. Packaging, Density and Container Economics
Aluminum is light. A 20-foot container can physically hold around 28 metric tonnes, but loose UBC bales rarely exceed 18–20 MT per box, while dense extrusion cut-offs reach 24–26 MT. Because ocean freight is charged per container, low-density grades carry a heavier per-tonne freight cost, and that cost ends up in the CIF price.
Pressed bales, briquettes and shredded material improve container fill and reduce the freight share of the final price. Buyers asking 'why is your CIF price higher than the FOB plus freight I calculated?' are usually looking at a low-density grade where the supplier is absorbing under-utilised container capacity.
4. CIF vs FOB and Who Carries Which Risk
FOB Rotterdam means the price covers material loaded on board the vessel at the port; the buyer arranges and pays for ocean freight, marine insurance and destination charges. CIF Nhava Sheva, CIF Haiphong, CIF Mersin and similar terms include freight and insurance up to the named destination port.
FOB gives the buyer freight flexibility and is preferred when the buyer has a forwarding agreement or wants to consolidate multiple suppliers. CIF removes operational complexity and is preferred when the buyer wants a single landed number for their costing sheet.
5. Payment Terms and Their Impact on Price
Standard European B2B scrap terms are 30% telegraphic transfer in advance and 70% against a confirmed irrevocable letter of credit at sight, or 100% LC at sight from a top-tier bank. Sellers offering deferred payment, CAD or open account terms either work with long-standing repeat buyers or build a financing premium into the price.
First-time buyers should expect to negotiate around the 30/70 structure. Pushing for 100% LC at sight without an established history is reasonable, but expect a small price adjustment to cover the cost of LC confirmation by the seller's bank.
6. Inspection, SGS and Pre-Shipment Verification
For larger contracts and new trading relationships, an SGS, Intertek or Bureau Veritas pre-shipment inspection is standard. The cost (typically USD 350–600 per container) is usually built into the CIF price or paid 50/50. The inspector verifies weight, grade against the contract specification and confirms there is no radioactive material, sealed containers or other prohibited items.
For destinations such as China, Vietnam, Indonesia and Malaysia, a CCIC, Vinacontrol or SUCOFINDO certificate at origin may be a regulatory requirement rather than an optional check, and the cost is non-negotiable.
7. How to Read a Real Aluminum Scrap Quotation
A complete quotation should specify: ISRI grade name, LME reference date, percentage of LME or flat differential, packaging type, container size, MOQ, loading port, named destination port, Incoterm, payment terms, validity period and inspection clause. If any of these are missing, the quote is incomplete and the price is not yet comparable to other offers.
When comparing two suppliers, normalise everything to the same Incoterm and the same LME reference day. A CIF Mundra price quoted against last Monday's LME is not directly comparable to a FOB Rotterdam price quoted against today's LME minus a flat freight estimate.