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Aluminum billet premiums flat despite ABI issues

Keywords: Tags  aluminum billet, billet premium, billet prices, Alcoa, USW, Aluminerie de Bécancour, ABI, Quebec Michael Cowden

CHICAGO — Aluminum billet premiums remained unchanged in the past week despite limited spot deals booked at higher prices.

One producer source said his company had recently booked a deal for about 400 tonnes (881,849 pounds) at 12.75 cents per pound, while a second producer said his company had booked 400,000 pounds for April delivery at 13 cents per pound.

But other sources contacted by AMM said they had conducted no spot business lately, and even if they had they would be still be looking for premiums in the range of 12 to 13 cents.

AMM’s aluminum billet premium remains unchanged at 12 to 13 cents per pound.

Several producers said they have no spot availability until April.

Some market sources speculated that billet prices and premiums could shoot up if there’s a production disruption at the Aluminerie de Becancour Inc. (ABI) smelter in Quebec, noting that if the smelter were to shut it could be months before production resumes. But expectations of a supply squeeze haven’t yet translated into higher spot prices.

A third producer source said some of his customers, who are also supplied by ABI, had approached him about potentially increasing their usual purchases. He said his company might be able to make additional capacity available if necessary, but that any disruption would likely be "painful in the short term."

An extruder said his company had been buying extra material since November, when the previous ABI labor contract expired. But even with that additional material, he said his company would have a cushion of just a few weeks.

Some buyers might have become complacent about ABI as talks between the company and the United Steelworkers union dragged on, the first producer source speculated. After pre-emptively building inventories and being caught long in late 2012, they might have reversed course and whittled down supplies too far going into 2013, he said.

Yet while questions about ABI loomed over the market, participants generally said demand continues to rebound after a slow start to the year—a trend similar to last year’s, but one that could have more upside potential in 2013 given a potentially healthier economy.

Workers at Alcoa Inc.’s majority owned ABI have been asked by a USW negotiating committee to reject the company’s final contract offer. A vote is scheduled for Feb. 12 and Feb. 13 (, Feb. 7). Pittsburgh-based Alcoa and the union have been trying to renew a labor contract covering 900 workers at the 400,000-tonne-per-year smelter since September (, Jan. 4).

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