NEW YORK North American
aluminum billet producers and consumers say that the spot
market is effectively "dead" as the industry continues to move
into year-end inventory control and awaits the outcome of labor
contract discussions at Alcoa Inc.s Aluminerie de
Bécancour (ABI) smelter in Quebec.
Several producers told AMM that
they hadnt made any spot deals recently, with premiums
unchanged from their current range of 11 to 13 cents per
"The market is dead. I
cant sell anything. Everyone has inventory and is trying
to plan for the year ahead," one producer said. "Customers have
been making contingency plans for the Alcoa issue. I think
there was a lot of metal that was shipped early."
Pittsburgh-based Alcoa and the
United Steelworkers union have yet to reach an agreement
despite the passing of an extended deadline of Nov. 27 (
amm.com, Nov. 28).
"I think a few people picked up
a little extra inventory for December, which is usually a slow
one," a second producer said. "People bought as much as they
could, just in case.
"Its the end of the year,
and everyone wants to make sure they are going to look good for
the final inventory picture," he added.
One trader said the industry "is
on a knife edge waiting to see what happens with ABI," with the
second producer noting that a strike "could heavily trouble the
billet market" due to ABIs position in the market.
While the threat of a strike is
reported to have largely quelled current spot activity, a third
producer said the situation was keeping spot premium quotes
relatively high "in what normally would be an end-of-year
However, one consumer described
the timing of the contract discussions as "advantageous" for
minimizing market disruption. "In late November and December,
things tend to slow down anyway," he said.
"The impact is minimal right now
because there is ample billet," a fourth producer agreed.