NEW YORK Few spot deals
for aluminum billet closed in the past week on a combination of
seasonality and high consumer inventory levels.
Tepid activity kept spot
premiums between 11 and 13 cents per pound, but few sources
said they were concerned about the lackluster kickoff to 2013
as they expect the automotive and construction markets to keep
producers and extruders busy this year.
"(Our consumers) are expecting
2013 to be at least as good as 2012," one producer source told
AMM. "Automotive will be good; housing will be better.
Things will come back. Its all part of seasonality."
The slow start was typical, a
second producer source said. "Automotive is strong and I have
to think thats going to drag everything along with it.
And with construction, even a modest rebound is going to help
the industry. I find people have short-term memories (and)
forget what seasonality is."
Pittsburgh-based Alcoa Inc.
anticipates 2- to 3-percent growth in construction for the
first time in four years and a 1- to 4-percent uptick in
amm.com, Jan. 8). Domestic vehicle production
should hit 16 million units this year, Alcoa said (
amm.com, Jan. 9).
"There is definitely a lot of
excitement over automotive16 million cars is a big
number," a third producer source said.
Despite the dearth of spot
deals, one consumer said he has been busy with orders from his
end-marketsmarine and automotive. "Marine is always
strong in January. (Boat) shows start now, so people are
shopping. When the ice melts off the lake in the northern
states, thats when people hit the (water)," he said.
The consumer has not had to
purchase any spot material because he stocked up late last year
in case labor contract talks at Alcoas Aluminerie de
Becancour smelter in Quebec turned sour (
amm.com, Jan. 4). However, he might turn to spot
metal if his end-consumers stay busy, he said. "All of the
metal were using is contracted. We havent looked
for any additional spot. Were running pretty high on
inventory because of Alcoa, but if our (orders) stay up we may
need to consider (spot) in February."
However, a second consumer was
less confident that the slow start is seasonal, arguing that
the debt ceiling debate is hindering the U.S. economy. "There
may be something more to it," he said. "The jurys still
out. What with the election and the fiscal cliff, I wont
say a whole lot of people slammed on the brakes, but they
definitely werent pounding on the gas, either. There
seems to be a crisis of confidence. Its clear the
government has been much more aggressive ... in influencing
business activity. And I think youll start to see
concerns over demand in late March."
Last year, tight supply coupled
with decent demand pushed spot billet premiums to record highs,
encouraging producers to raise contract premiums by an average
of 2 cents per pound (
amm.com, Sept. 27).
The second consumer said he
purchased just 85 percent of his 2013 metal on contract
"because of the increase in the billet premiums," and feels
that premiums "may come under pressure, particularly if demand
softens" this year.
Some end-markets are expected to
decline this year, with Alcoa forecasting a 15- to 19-percent
drop in the truck and trailer sector.
But most were optimistic.
"Theres still uncertainty, so anything negative is
overamplified," the second producer source said. "But
springtime is just around the corner."
"If markets are the same or
increase just a little, it will be a good year," the first
producer source said.