NEW YORK North American
aluminum billet producers and consumers are awaiting the
outcome of labor contract discussions between Alcoa Inc. and
the United Steelworkers union at the Pittsburgh producers
Aluminerie de Bécancour (ABI) smelter.
Alcoa and the union had yet to
reach an agreement Wednesday despite the passing of an extended
deadline of Nov. 27.
If an agreement is not reached
and some 900 workers at the 400,000-tonne-per-year smelter go
on strike or are locked out for a prolonged period, North
American billet supply will be affected, according to producers
Producers say markets will feel
the pinch almost immediately if potlines are shut down. Even a
weeklong strike could cause a backlog of shipments for several
weeks, one producer told AMM.
Consumers argue that production
would have to be shut for a number of months before it would
have any significant effect, as most took precautions in
anticipation of a shutdown at ABI and have extra inventory on
"We have a reasonable amount of
inventory. We were looking at (ABI), so we went a little above
what we would normally have this time of year in case of a
slowdown or shutdown," one consumer said. "It would have to go
on for at least a few weeks before wed notice it."
"I suspect that (like us) other
billet customers have contingency plans in place to deal with a
potential work stoppage," a second consumer agreed. "It will
not be an issue unless it goes beyond three months or more.
There (is) plenty of imported billet stocked up at the ports in
"If they dont make billet
for a week, its probably not a huge deal," a trader said.
It wouldnt take long before the impact is felt, though,
But a second producer source
said his company is waiting to hear what the outcome is in
Quebec before closing spot business for December.
"I keep receiving calls from
traders looking for some (spot) and I keep saying, Not
yet," the second producer said. If ABI is taken out of
the equation, the producers excess capacity "will
The talks have also impacted
next years contracts: Alcoa put a clause in its 2013 ABI
contracts that says if an agreement is not reached between the
union and the producer, the contracts are null and void (
amm.com, Oct. 19).
Spot billet premiums continued
to trade at between 11 and 13 cents per pound Wednesday, but
sources expect a rise next year, especially if ABIs
production is halted.
"If they strike, we would raise
our offer to 16 or 17 cents," the trader said.
Consumers say they continue to
look for other areas to source billet if a strike is
"We have a backup plan of where
well get billet. Well just have to see where
were at in the pecking order," the first consumer