NEW YORK Prices
for deoxidized aluminum, or deox, have fallen sharply, with
participants saying that a few sellers are consistently
undercutting the entire market.
fell to a range of 90.5 to 92 cents per pound by the end of
September, down from 94 to 97 cents in the middle of the
reported exiting the market entirely once sales dipped below 94
cents per pound. "We pulled back and did not sell into that
kind of market," one seller told AMM. "These guys
think cash flow is more important than making money." Scrap is
still tight, but "there are still sellers out there dropping
their pants. I dont get it."
Others said that the
introduction of an electronic auction by Chicago-based
steelmaker ArcelorMittal USA LLC was inciting intense price
competition among deox sellers.
A second seller said
he heard that one company sold a load of deox to ArcelorMittal
at 91.5 cents per pound in the middle of the month. "Its
turning into eBay for metal," he said. "There is no
relationship. Unfortunately, there are no other options at this
point. People have to make sales to keep things running."
auction format is designed as a reverse auctiona style of
price negotiation where suppliers, not consumers, place quotes
online. Sellers then receive feedback on their current position
and can adjust bids to the level of competition, according to
several auction participants.
"We have to
participate whether we like it or not," the second seller said.
"Arcelor is just too big of a player in the deox market."
operating on negative margins will have to adjust their
business practices, a third seller said. "These people
dont understand the big picture; its desperate
selling and it hurts them and the entire industry."
The formula for
manufacturing deox is not entirely dissimilar to that of A380.1
or 319.1, a fourth seller said. "Look at the price of A380 or
319.1," he said. "You use relatively the same scrap for deox,
minus the copper and silicon, which at most will add about 5
cents to your cost. I am baffled beyond reason why someone
would sell below 95 cents per pound. Somebodys got to go
belly up here."
Most buyers and
sellers of secondary aluminum alloy pegged A380.1 at $1.02 to
$1.03 per pound and 319.1 at $1.07 to $1.09 per pound Oct. 3,
unchanged from two weeks earlier.
A fifth seller said he
had set prices at between 94 and 95 cents per pound and was
unable to participate after mid-September. "I guess some guys
had some serious inventory and had to move product," he said.
"Obviously, those type of sales are a loss any way you slice