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
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
"We dont 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.
Its 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 Alcoas forged wheel division, sources
"From what I understand, Massena
West is a specialty billet plant that feeds (Alcoas) own
internal supply primarily," the second producer source said.
"Forged billet is absolutely crack-free, and has (very strict)
inspections. Its not like any producer can step in."
The first producer source
confirmed that Massena West mainly supplies Alcoas
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 its down and
what (Alcoa) had in inventory," a third producer source
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
Alcans 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,