NEW YORK Nichols Aluminum
LLC said it is more likely to raise its conversion fee to
offset tightening spreads on aluminum scrap rather than
implement a surcharge on its sales of building-grade aluminum
Jupiter Aluminum Corp. and JW
Aluminum Co. recently announced they would be adding
5-cent-per-pound surcharges on all orders, each citing
increased raw material costs as a crucial factor in the
decision (AMM, July 2).
However, a spokesman for Nichols
parent company Quanex Building Products Corp. said that Nichols
was unlikely to follow suit, despite operating in a similar
market space to Jupiter and JW.
"Nichols has not used things
like surcharges. We look to get the best market price we can,
and we would be looking at the conversion fee as a way to raise
prices if we needed to," the spokesman said. The fee, also
known as a tolling charge, seeks to cover all costs in the
Nichols, which primarily
purchases 3105-based alloys, particularly painted siding, for
the production of construction-grade aluminum products, agreed
that the spreads on these items had become more difficult for
buyers since the beginning of the year.
constrained to the building product-type alloy because in this
process youre trying to avoid expensive sweeteners. For
anybody running a building products alloy, were all
struggling to find it at reasonable prices," the spokesman
said. "Theres no ducking this. If youre trying to
buy gutter-quality scrap, its tight. But because demand
is good, we have to secure the scrap."
He said that "multiple service
issues" caused by a strike at Nichols Davenport facility
earlier this year played a role in the companys decision
not to implement a surcharge similar to Jupiter and JW.
"During the strike, we did not
do a great job, because of productivity issues, in servicing
customers," he said. "Were cognizant of what is most
important, and that was getting deliveries back on-time with
Meanwhile, an Alcoa Inc.
spokesman said that his company also had not been influenced by
the moves of Jupiter and JW. "We really dont follow
anyonewe tend to take positions that lead. That said, we
always price our products in a way that reflects current market
conditions, of which there are numerous," he said.
A Davenport & Co. LLC report
Thursday said that Aleris had announced a 5-cent-per-pound
surcharge on building sheet products. Aleris did not respond to
AMMs request for confirmation.