AMM.com Copying and distributing are prohibited without permission of the publisher
Email a friend
  • To include more than one recipient, please separate each email address with a semi-colon ';', to a maximum of 5


US aluminum billet premiums stay steady

Keywords: Tags  Aluminum, billet, Alcoa, ABI, premiums, automotive, construction, marine Suzy Waite


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. It’s all part of seasonality."

The slow start was typical, a second producer source said. "Automotive is strong and I have to think that’s 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 automotive ( 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 automotive—16 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-markets—marine 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, that’s 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 Alcoa’s 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 we’re using is contracted. We haven’t looked for any additional spot. We’re 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 jury’s still out. What with the election and the fiscal cliff, I won’t say a whole lot of people slammed on the brakes, but they definitely weren’t pounding on the gas, either. There seems to be a crisis of confidence. It’s clear the government has been much more aggressive ... in influencing business activity. And I think you’ll 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. "There’s 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.


Have your say
  • All comments are subject to editorial review.
    All fields are compulsory.



Latest Pricing Trends

Poll

Is severe weather affecting your business?

Yes
No


View previous results

AMM Events