CHICAGO Aluminum billet premiums have increased as spot
activity picked up following a slow start to 2013.
AMM narrowed its 6063 billet premium range to between 12 and 13
cents per pound Jan. 25 from 11 to 13 cents per pound
previously. Volumes reportedly traded totalled in excess of
4,200 tonnes or 9.26 million pounds over the past week in
comparison to about 2,500 tonnes recorded a week earlier (
amm.com, Jan. 16
Demand is likely to heat up further from April to June thanks
to strength in the automotive sector, continued improvements in
construction activity and a slowly but steadily improving U.S.
economic outlook, several market sources said.
There is this wonderful thing called the economy,
one trader said. Its actually growing. And with
growth comes consumption.
Others noted that a somewhat more settled domestic political
landscape and a lack of imports were also supporting higher
January was a slow start, but people are
optimistic, a producer source said. February is
going to be much better than January, and March is looking much
more solid than the first two months of the year.
While the majority of reported business was concluded within
the new range the second producer said that his company had
conducted some spot business in the range of 11 to 13 cents per
pound. Other market players contended that the 11-cent figure
was now gone from the market.
A consumer said that his firm had seen some lower-priced
offerings in December and early January as producers looked to
sell uncommitted capacity in the lead-up to or shortly after
the year-end holidays. But more recently, his firm has booked
3.5 million pounds at approximately 12 cents, he said.
As long as the general economic environment is holding ground
or improving, his firm expects to see 2013 volumes on par with
or better than those in 2012, he said. There are no data
points that say we should be overly concerned, he said.
But while physical demand may be improving, the consumer said
he was puzzled by the fact that P1020 premiums, currently at
11.3 to 12 cents per pound, and 6063 billet premiums are
nearing convergence, a historical anomaly made all the more
surprising given the size of aluminum inventories in London
Metal Exchange-registered warehouses.
Billet and P1020 premiums now represent a much bigger portion
of total production costs than in the past, a phenomenon
largely only acceptable because aluminum prices are in
the tank, he said.
The prospect of a production disruption at Alcoa Inc.s
Aluminerie de Becancour (ABI) smelter in Quebec remains a
Pittsburgh-based Alcoa and the United Steelworkers have been
trying to renew a labor contract covering some 900 workers at
the 400,000-tonne-per-year ABI smelter since September, leaving
some nervous that billet supply will diminish if negotiations
turn sour (
amm.com, Jan. 4
The elephant in the room is whats going to happen
at ABI, the producer said. If theres
something that keeps me awake at night, thats it.