NEW YORK Aluminum
consumers should buy directly from producers and stop
complaining about long queues at warehouses and the high cost
of buying physical metal, according to Alcoa chief executive
officer Klaus Kleinfeld.
Consumers made the "dangerous
assumption" that aluminum prices were going to fall, and this
set them up for difficulties if they delayed purchasing metal,
he told AMM.
"What we believe were
seeing is that many consumers reduced their amount of buying in
the market because they assume the metal price is going to be
lower, or even lower going forward. And then when it isnt
that way, were hearing people complaining about the
queues and the warehouses, or high regional premiums,"
Consumers seeking metal could
"come to Alcoa and cut a long-term deal with us," he added.
"You dont need a warehouse in between and wed be
happy to deliver the metal to your doorstep. Were open
for business on that. Consumers dont need to wait in a
Like many aluminum companies
around the world, North American producers like
Pittsburgh-based Alcoa and Rio Tinto Alcan, Montreal, found
themselves in the unfortunate position of having excess
material with no consumer outlet for the product.
This is despite exercising
producer discipline and taking the tough decision to cut output
across their higher-cost operations.
Financing dealsaimed at
locking away metal while demand was slackthen became
viable due to low interest rates and higher aluminum futures
prices vs. cash prices, or a contango.
Queues to access material grew
as aluminum flowed into warehouses, with hot spots for delays
including Metro International Trade Services LLCs Detroit
sheds and Pacorini Metals facilities in Vlissingen, the
Consumers arent the ones
in the queues to get metal anyway, Kleinfeld said.
"Where were consumers at the
time when they could have bought metal cheaply? Theyre
not in the queues either. Where are they today? How many of
those consumers are really out there and hedging their future
metal?" he asked.