NEW YORK As the
die casting industry continues to scrutinize the North American
special aluminum alloy contract (Nasaac), major domestic A380
alloy producers have informed consumers and suppliers they are
unlikely to use the contract again, a top executive at Metal
Conversions Ltd. said at AMMs Aluminum Summit in
"Weve seen the
commoditization of 380," said Rob Carey, president and
principal of the Mansfield, Ohio-based company.
"At first, in 2003, I
supported the (Nasaac) contract," he said, but the contract no
longer reflects the actual market, he said.
Carey isnt the
only industry player to express discontent with what he has
called a "failed contract" (
amm.com, Oct. 9). Major alloy producer Aleris
International Inc. said in October it was planning to
discontinue using pricing formulas based off the contract in
favor of measurements that correspond more closely with its
scrap purchasing costs (
amm.com, Oct. 9); a few months later, the North
American Die Casting Association (Nadca) filed a complaint with
the London Metal Exchange claiming "significant issues with the
effectiveness" of its Nasaac contract (
amm.com, April 30).
As a result of what he
called Nasaacs ineffectiveness, cast alloy producers no
longer have the ability to hedge their products, Carey
"Its no big
deal; weve always been risky," Carey added. "It looks
like the secondaries will not support the Nasaac contract.
Every secondary that has authorized me to say this for them ...
is never going to use it again."
Nadca and the LME had
a telephone meeting last month to discuss the contract and
possible changes that could restore users faith in it (
amm.com, May 22), but Carey said even the adoption
of Nadcas recommendations might not be enough to
reinstate the industrys support of the tool.
"If this contract and
the die casters can get it back to some semblance of stability,
it will be two to three years before the secondaries have any
trust for the contract," he said.
In spite of the
Nasaacs ongoing problems, demand for cast alloys has
never been stronger, Carey said.
"Those of us that
produce for the automotive industry, which is mainly the cast
alloy producers, have no fears," he said. "The strategic
importance of the automobile far trumps painted siding, UBCs
(used beverage cans) and aluminum window frames. I really have
no concerns for the cast aluminum industry."
"Right now, there are
approximately 15 million cars being recycled every year, which
is generating in the vicinity about 3 million pounds of zorba.
A lot of that is going export, but we can keep those units in
this country anytime buyers want it. The drive for scrap is
going to drive all of the margins closer to P1020. Its
inevitable," he added.
Carey concluded by
saying that effective scrap purchasing is the key to long-term
success in the industry.
"For us, scrap buying is the keythe only keyto
making money in the aluminum recycling industry," he said.
"Whether you are a cast alloy producer, a mill recycler, an
extruder recycler, a die cast recycler, its all about
efficient purchasing. This is where everybody is beginning to
lose it. I have a great respect for MBAs, but MBAs cannot
establish rapports with scrap dealers."