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Billet market continues to await ABI deal

Keywords: Tags  aluminum billet premiums, aluminum billet, Alcoa, ABI, Aluminerie de Becancour, Daniel Fitzgerald

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 hadn’t made any spot deals recently, with premiums unchanged from their current range of 11 to 13 cents per pound.

"The market is dead. I can’t 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 (, 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.

"It’s 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 ABI’s 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 discount time."

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.

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