NEW YORK The North
American Die Casting Association (Nadca) has filed a letter of
complaint with the London Metal Exchange calling for immediate
changes to the North American special aluminum alloy contract
Nadca, which claims to represent
more than 95 percent of all North American die casters, has
been experiencing "significant issues with the effectiveness"
of the Nasaac contract, the group said in an April 25 letter to
the chairman of the LMEs aluminum committee Gavin
"Unless (the) LME can make
changes to the contract immediately, Nadca will encourage all
die casters to discontinue support of the Nasaac for pricing
finished aluminum parts within the industry," Nadca said in the
Representatives from the LME
didnt respond to requests for comment.
Nadca said it has multiple
issues with the contracts effectiveness.
For example, the group alleges
that many producers of 380 aluminum alloy will no longer sell
to consumers on a Nasaac basis; material purchased on Nasaac
isnt deliverable within the stated LME contract period;
and producers and consumers cant acquire physical Nasaac
material from the LME-listed warehouses in less than nine
months from the time of order. Nadca also alleges in the letter
that "the market is perceived as being manipulated by the
trading, financial and warehouse industries given financial
ownership of LME warehouse facilities."
These issues have together led
to a lack of correlation between the LMEs Nasaac prices
and the physical price of 380 aluminum alloy, Nadca alleged in
"Nadca is determined to bring
awareness of the die casting industrys issues with the
Nasaac/LME," Daniel L. Twarog, Nadcas president, told
AMM April 30. "We are doing this in order to create a
fair and equitable arrangement between the customers we provide
quality high-pressure die casting to and our industry."
The cash Nasaac contract ending
the official session at $1,755 per tonne (79.7 cents per pound)
April 30, up slightly from $1,730.50 per tonne (78.4 cents per
pound) a day earlier, which marked its lowest level in nearly
three and a half years.
AMMs A380 alloy price has held steady in a range
of $1.04 to $1.05 per pound since March 14.
Several die caster sources have
told AMM that there has been widespread delinking
between Nasaac and the physical aluminum alloy market over the
past six months.
"It is no longer market-based
and it does not follow normal market fundamentals of supply and
demand," a source at a major die casting company said, adding
that the situation is making things difficult for companies to
purchase metal and sell aluminum castings in a way that
properly shares risk and rewards with market participants,
including domestic auto manufacturers and financial
A number of die casters said
their margins are being squeezed by having to sell on an Nasaac
basis to the auto manufacturers, who use the Nasaac prices to
assess the value of the aluminum alloy contained in auto parts.
But others pointed out that the auto manufacturers are unable
to shift from Nasaac-based contracts because of their own
"The real problem is that auto
firms would like to make a change but the financial community,
who have interests in the contract, will simply not allow it to
happen," one industry participant said.
"This issue is more important
than just my company; its the entire industry. ... We
need a vibrant industry and the guys that are 100-percent
automotive are absolutely getting killed. If something
doesnt change soon, the industry will face some very
serious challenges in the near future," a second die caster
"Unless the die casters can get
metal from the Nasaac warehouse in a timely manner at the price
they are publishing, we will encourage our industry to
discontinue support of the Nasaac for pricing aluminum die
castings," Twarog added.