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Aluminum billet inquiries rise ahead of holiday

Keywords: Tags  Aluminum, billet premiums, Alcoa, Norsk Hydro, Suzy Waite

NEW YORK — Aluminum billet producers have reported a rise in inquiries ahead of the July 4 holiday, but capacity constraints have prevented most suppliers from taking advantage of the high level of interest.

Spot billet premiums remained firm at between 12.5 and 13.5 cents per pound this week, with some producers maintaining they would not consider selling below 13 cents.

"Premiums are higher than I’ve ever seen them before," a billet consumer said, calling the market "tight."

"We’re fortunate to have some good relationships so we have been able to get metal, but let’s just say it is certainly tighter than it has been for probably four years," the consumer said.

One producer told AMM he has been receiving plenty of spot inquiries but would not be able to accept them as he is planning a routine maintenance outage over the July 4 holiday, making supply slightly more restricted than normal.

"(We’ve got) no capacity but many inquiries," he said, adding that the last spot deal he closed was in mid-June at 13.4 cents per pound for June and July delivery.

"People tell me to call them if we have any spot," a second producer added, noting that although he has little excess material to sell, the market is very much a sellers’ market today. "Business is good, premiums are up, the LME is down. I had a customer tell me this morning that (markets) have convincingly turned in our favor, and that I can charge whatever I want."

The cash aluminum contract on the London Metal exchange traded at $1,810.5 in the officials Wednesday, its lowest level since October 2009, before recovering slightly to $1,832.50 Thursday.

Meanwhile, discussions for next year’s billet contracts continue.

"We’ve started working on 2013 contracts. Extruders are interested so we started early," the first producer said.

A third producer said he has received inquiries from potential new customers about contracts for next year as well.

"I feel like I’m being courted," he said. "He wanted to see our capacity. He’s had a nightmare securing billet (this year). I told him I haven’t done spot in the last couple of months because we have to meet our contract customers’ needs. I think it was music to his ears."

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