CHICAGO Aluminum billet sector outlooks continue to diverge as some market players bank on a strong second half while others dont expect any significant changes until annual price negotiations later this year.
Several sources reported likely isolated but expedited deals in the Midwest and the Northeast last week at higher premiums. As a result, AMMs billet premiums have risen slightly to 12 to 13 cents per pound from 11.5 to 13 cents previously.
"The telephone is ringing a little bit more, so Im crossing my fingers for the rest of the year," a producer source said, predicting his company will see a strong June but could have some spot availability in July, a month that will have five weeks of production. "I might have to go out and bang on the doors of the traders. Id like to see it busier. But I am expecting to book to capacity" with either contract business or a combination of contract and spot business.
A second producer source said his company was continuing to see improved demand from a host of end markets, particularly building and construction, noting that initial requirement indicators for July have been positive. "We expected it to be busier. But we are generally more positive about the second half than the first," he said.
A consumer said his company has seen strong marine sector demand in the upper Midwest as ice melts and demand for docks, boats and pontoons revs up from May into July. But he questioned whether that is a good gauge for the rest of the year, predicting overall consumption would be flat year on year.
He plans to negotiate harder on annual contracts this year after building stocks in preparation for an expected labor strike at Alcoa Inc.s majority-owned Aluminerie de Bécancour Inc. that didnt materialize (amm.com, Feb. 22).