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Aluminum billet market remains strong

Keywords: Tags  Aluminum billet, Norsk Hydro, Alcoa, Glencore, Massena West, Suzy Waite

NEW YORK — Demand for aluminum billet remains strong, and although market participants report more material entering the United States, supply is still tight and premiums remain at record-high levels.

The range for spot aluminum billet premiums has widened to 12 to 13 cents per pound from 12 to 12.75 cents previously, with one producer getting 13.5 cents this week for an uncharacteristic load.

"Right now, we’re trying to assess how much more our customers want and see if we can supply them or not," one producer source told AMM. "Our customers are still very optimistic for the upcoming months."

"It’s the same story here," a second producer source told AMM. "Contracts are maxing out our production capacity, leaving little (room) for spot."

"I sell more than I’ve got," a third producer source said.

Domestic extruders have been in full ramp-up mode. AACOA Inc., a Niles, Mich.-based extruder, recently bumped up its production to a 24/7 schedule (AMM, May 2), while nearby Lippert Extrusions, a division of Goshen, Ind.-based Lippert Components Inc., is bringing its three presses to full nameplate capacity of 50 million pounds per year to meet rising demand (see related story, page 8).

Although sources expect more material to hit U.S. shores in upcoming months—Baar, Switzerland-based Glencore International Plc plans to move some 20,000 tonnes of billet to the United States in the next few months (AMM, April 30)—supply is still at the forefront of attention among North American consumers and extruders.

"That would be a lot (of billet)," a trader said of Glencore. However, if the Swiss trading house sells that billet to the spot market throughout the rest of the year, it’s not very likely to affect premiums, he added.

"Ultimately, (Glencore’s offshore) billet won’t have a significant impact on the big-picture supply issues," a fourth producer source said. "The market is strengthening, and supply is tight. It’s squeaky tight."

"If the market appears to be a little less red-hot, it’s just because there are more units available," the first producer source said.

North American supply concerns have built over the first four months of the year as speculation continues to mount that Oslo, Norway-based Norsk Hydro ASA will permanently shutter its Kurri Kurri smelter in New South Wales, Australia (AMM, March 29).

A March 29 fire at Alcoa Inc.’s Massena West facility that halted billet production has added fuel to supply concerns (AMM, April 5). Although Massena West primarily produces forged billet for its own internal consumption, it also supplies other industries, leaving participants convinced that it will have a negative impact on North American markets.

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