NEW YORK Prices for deoxidized aluminum, a key component in steelmaking, declined significantly in October as heavy competition among producers coupled with limited demand weakened the market.
Most producers said prices at the start of October hovered around 93 to 95 cents per pound, down 2 cents from mid-September. However, by months end prices moved to around 89 to 92 cents per pound, down about 1.5 cents from the end of September (amm.com, Oct. 4).
Despite stable raw materials costs and a relatively unchanged secondary alloy market, deox producers continued to complain of a "sinking spot market" caused by a group of producers willing to sell material at "well below market levels," sources said.
Several producers reported hearing a low sale of 89 cents per pound at the end of the month.
"Deox continues to be very worrisome, as we understand some 89-cent cone sales were made," one producer told AMM. "We have been clever with our blends to eke out a small profit this year, but we cant make money at 89 cents and we are near the top in buying and production efficiencies."
Inexperienced sellers were attempting to "drive out producers," the producer said, but added that "we are not going anywhere."
In contrast to the A380.1 market, which has experienced unprecedented demand from the automotive sector, the deox market is relatively captive at about 32 million pounds per month, several producers said.
"You have a situation where everyone is fighting for the same tonnage," a second producer said, noting that businesses struggling to maintain proper cash flow have been selling into the market at depressed levels. "As long as they can cover their costs, they are going to continue this thing until they can do it no longer."
A third producer said he was able to close a late-month sale after one producer backed out of a contract. "They sold at a ridiculously low price, couldnt get the material to produce, and bowed out," he said, noting that he sold the load at about 95 cents per pound. "(This price) is a sensible number. We can make money at the number. Anything lower, we wont participate."
Others expressed dismay at the future prospects of the deox market. "The price is not even shockingly low, or incredibly low; its stupidly low," a fourth producer said. "These low-ballers are absolutely whoring the market. At some point, somebody has to go out of business for this thing to turn around and to stop this ridiculously low pricing."
A fifth producer said his current strategy involved reducing production while attempting to maintain amicable relationships with buyers. "Our strategy is to cut our capacity to the minimum that will keep us as a legitimate producer," he said.