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.
reported hearing a low sale of 89 cents per pound at the end of
"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."
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
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.