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Aluminum billet premiums graze 13¢/lb.

Keywords: Tags  Aluminum billet premiums, Alcoa, Rio Tinto Alcan, Massena West, Norsk Hydro, Suzy Waite


NEW YORK — Aluminum billet spot premiums have hit 13 cents per pound for the first time since August on the back of increasingly tight supply due to a number of planned and unplanned outages, as well as continued strong demand.

Spot premiums are in a range of 12 to 13 cents per pound, up from 12 to 12.75 cents last week, producer and trader sources told AMM.

Despite the higher premiums, a number of suppliers said they are still hesitant to make spot sales because their contract customers continue to request their full tonnages.

"We have very little spot capacity after fulfilling our contracted volume," one producer source said.

"We don’t have much spot capacity, but we did sell a little (for) May (delivery) at 13 cents," a second producer source said.

The higher prices come as billet supply concerns, which have been mounting all year, are on the rise following a fire last week at Alcoa Inc.’s Massena West casthouse (AMM, April 2). No timeline has been set for when the casthouse will resume normal billet production, an Alcoa spokeswoman said.

It’s still unclear how the Massena West outage will impact North American billet markets, since the majority of billet produced at the casthouse is usually used by Alcoa’s forged wheel division, sources said.

"From what I understand, Massena West is a specialty billet plant that feeds (Alcoa’s) own internal supply primarily," the second producer source said. "Forged billet is absolutely crack-free, and has (very strict) inspections. It’s not like any producer can step in."

The first producer source confirmed that Massena West mainly supplies Alcoa’s internal needs, but said he nonetheless believes the outage will impact overall markets. "They cast billet for every market. Their main customer is the Alcoa forged wheel division in Cleveland, but other markets were being served," he said. This could ultimately create a domino effect where another plant will have to step up and produce for the forged wheel division, thus taking away from other consumers, he added.

"Whatever they were producing (at Massena) will have to be produced somewhere else, which might have an impact, depending on how long it’s down and what (Alcoa) had in inventory," a third producer source said.

The Alcoa spokeswoman declined to comment on the sourcing strategy, adding that "we are continuing to work with our customers to minimize the impact and identify alternative sources of supply."

Meanwhile, Rio Tinto Alcan’s planned 10-day maintenance outage at its Arvida smelter in Quebec has added fuel to supply concerns (AMM, March 14), although sources said the Montreal-based producer will be able to meet its customers’ requirements with billet from its European smelters. The outage is scheduled to start April 10.

In addition, an estimated 425,000 tonnes of European capacity is in jeopardy (AMM, Feb. 6). Rumors that Norsk Hydro ASA will permanently shut its Kurri Kurri smelter in New South Wales, Australia, has only enhanced supply concerns (AMM, March 29).


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