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Aluminum billet premiums hold steady

Keywords: Tags  aluminum billet, billet premium, Century Aluminum, Rio Tinto Alcan, Michael Cowden

CHICAGO — Aluminum billet premiums are holding steady in a quiet spot market while contract talks for 2014 have largely concluded, market sources said.

Spot Midwest 6063 extrusion billet upcharge premiums are unchanged at 11.5 to 12.5 cents per pound amid tepid spot demand as consumers look to wind down inventories before year-end and as producers and buyers slate outages during the typically slow holiday season.

Contract prices for 2014 are reported in a wider range, with premiums as low as 11 cents per pound and as high as 13 cents per pound. Some consumers reported buying from several producers on contract terms varying by as much as 1.5 cents per pound. Despite that variance, market sources said contract prices are roughly on par with 2013 deals, with prices even, slightly lower or slightly higher depending on the supplier.

Looking to 2014, market sources said they expect billet supply and demand to be roughly in balance, with metal readily available but not flooding the market. Some sources had expressed concerns that availability could tighten if Century Aluminum Co.’s Sebree, Ky., smelter did not receive a new power contract, but those fears were largely calmed by the Chicago-based company’s announcement that an agreement had been reached (, Nov. 20). However, some buyers said they would remain guarded about the situation until the power deal is approved by state regulators.

Market sources reported better-than-expected fourth-quarter demand from service centers and the truck-trailer market after a slow start to the year. Solid demand also was reported in sectors as diverse as the solar, recreational, and building and construction markets. Some sources said that industrial demand had slowed but also noted that the trend was not unusual in the winter months as industrial customers take planned outages and grapple with winter weather.

Montreal-based Rio Tinto Alcan Inc. was generally reported to be higher priced than most suppliers, especially following a price increase announced earlier in the year (, Nov. 8), which some consumers characterized as a leading move while others criticized it as placing the company out of their price range.

Rio Tinto Alcan may have less metal to sell now that its former plant in Sebree is in the hands of Century and can therefore be more selective in which customers it chooses, some market sources said.

Other sources said the increase might be due to the company’s ability to command a premium for niche, value-added products that are not easily available from offshore competitors.

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