CHICAGO The aluminum
billet market has softened in recent weeks as uncertainty over
the economy weighs slightly on premiums.
billet premium range widened to 11.75 to 13 cents per pound
last week from 12 to 13 cents previously.
"Its a little bit of a
mixed bag," one consumer source said. "Some people are
reporting fairly bullish numbers and premiums still on the high
side, yet we see a lot of billet being offered at the moment,
suggesting the dew is off the lily."
He said his company had seen a
lot of unsolicited billet offers recently and could obtain it
at premiums under 12 cents. "Im not sure why some people
think the market is poised to continue to strengthen. Its
just not that strong," he said.
Some sources said that billet
demand and premiums had been bolstered by improved activity in
the building and construction sector, increased aluminum
penetration into the automotive market and low aluminum prices
on the London Metal Exchange, which make consumers less
sensitive to premiums.
"I dont know one buyer who
would give an extra penny on billet premium just because the
LME is lower," the consumer source said. And building and
construction activity, while moving in the right direction, is
not yet strong enough to have a significant impact on billet
prices or premiums, he added. Similarly, while the automotive
market may be on firm footing, there is not yet enough new
demand for aluminum from the sector to significantly bolster
The consumer source said his
company might even be willing to resell billet into the market
if it saw premiums as high 13 to 14 cents.
A producer source conceded that
the market is softer than expected. "Its far from
doomsday. But normally at this period, summer starts to kick in
and everyone is a little busier. Its just not happening
right now," he said.
A long winter may have delayed
some construction projects and could explain the current slow
market, the producer source said. "Im hoping that the
remaining half of the yearbecause we are already asking
customers to declare what they are going to take for
Juneis going to be OK."
He said his company had some
open capacity that it was looking to place with existing
customers, but it also was considering selling on the spot
market, where it would be happy with a premium of 12 cents.
Other sources agreed with the
assessment that the current lull might be weather-related and
cautioned against reading too much into what might be only a
short-term blip in activity and demand.
"The markets are OK. There are
some strong spots and some weaker spots. There is metal
available but not in abundanceand people arent
going to let it go unless they get their number," a second
producer source said.