NEW YORK Deoxidized aluminum prices have declined over the past month as producers agreed to lower numbers in a bid to maintain order flow.
Some sales reportedly fell to as low as 91.5 cents per pound at the end of August from a range of around 94 to 97 cents per pound in the first half of August.
Producers said a move by steel producer ArcelorMittal USA LLC to purchase deox via online auctions contributed to numbers falling in late August.
"ArcelorMittal has run an e-auction for a portion of our deox requirements and the company will maintain flexibility in its procurement approach for the material moving forward," an ArcelorMittal representative told AMM in an e-mail Sept. 3.
One seller said he saw auction prices for deox fluctuate as much as 5 cents per pound in August.
"The only people benefiting from these types of auctions are the steel mills," he said.
A second seller said auctions tend to produce intense pricing competition and undercutting, noting that price transparency can inspire sellers to rapidly adjust price quotes in line with lower bids.
The auction-style format signals a new phase for deox producers. Some have said they will leave the market until pricing returns to more favorable levels and will avoid auctions all together. "Those kinds of numbers93 to 95 cents per poundare dead losses in a market like this," a third seller said. "It just wont work."
A fourth seller said auctions are only beneficial for steel mills when there is extra production capacity in the spot market. He said that without this extra production, the auction format can hurt mills in need of immediate delivery.
Deox prices have been weakening since April amid increased competition and weaker demand (amm.com, May 3).