LONDON European aluminum
billet premiums have strengthened slightly after producers were
surprised by decent spot demand, although markets further
upstream have suffered from very low spot market activity so
far in 2013.
AMM sister publication
Metal Bulletins spot premium range narrowed to
$480 to $490 per tonne from $470 to $490 previously, and
producers are already offering at above $500 per tonne as
consumers come to market for short-term deliveries.
"There are some spot
opportunities, with people getting orders and then having to
come to us for metal," a producer source said. "Some are
accepting the new levels, while others are saying there are
lower offers. But were doing okay because were not
A second producer source
reported decent sales into Europe after sales had dried up at
the end of last year. "On the billet side, weve been
surprised by good demand from central and eastern Europe," he
said. "Demand is up since the end of last year but visibility
going forward is pretty low, so it has been a nice
Good billet demand on the spot
market has contrasted with very low spot demand for products
further upstream, with both primary aluminum and alumina
sellers reporting very low spot sales so far this year after
good volumes were booked on quarterly contracts for the first
three months of the year.
But total billet volumes on both
spot and contract sales remain below historical averages after
falling last year.
"The existing demand is putting
upward pressure on premiums, but were still below 2011
levels," the first producer source said. "We forecast that the
first half of the year will continue at these levels, and then
pick up in the third quarter to beat 2012 volumes."
But premiums could rise further,
even with limited demand, after supply fell in 2012 due to
The first producer source said
that premiums offered into Italy are above those being offered
further north, as supply in that region has been hit by the
full closure of Alcoa Inc.s Portovesme smelter in
amm.com, Nov. 7). "Italy is skimming the market on
the high side," the first producer source said, reporting
premium offers into Italy of about $510 per tonne.
Although the lost Portovesme
volumes may be made up by Alcoas Saudi Arabia-based
joint-venture Maaden smelterwhich produced its
first hot metal in December and will eventually produce about
135,000 tonnes of billet per yearthat material may not
find its way to Europe (
amm.com, Dec. 12).
"Weve not yet decided
where it will go," an Alcoa source said. "Every month we are
checking the arbitrage between different regions."
A version of this article was first published by AMM sister
publication Metal Bulletin.