aluminium commodity news-Pace of downturn in 226 prices slows

The pace of the downturn in the price of Europe’s key aluminum alloy grade, 226, slowed last week as spot prices fell by just Eur10/mt ($11/mt) instead of the Eur20-30/mt weekly falls that had become a regular occurrence since mid-April.

With many of the larger quarterly buyers having already fixed for the third quarter, sales activity was slower last week, market sources said.
“This week was quieter with holidays in Germany and Switzerland on Thursday,” an Italian alloy producer said.
He indicated that most sales for larger consumers were done at Eur1,670-1,690/mt delivered last week with smaller buyers paying Eur1,700-1,720/mt delivered.

A German supplier said larger buyers had achieved prices in the region of Eur1,680/mt delivered and spot prices in general were “struggling at around Eur1,700/mt.”
In the week ended June 9, a large consumer fixed quantities for delivery to the Czech Republic at around Eur1,680/mt delivered, but last week the low end had shifted to around Eur1,670/mt delivered, a European trader said.
“It’s now not possible to sell at Eur1,700/mt delivered. … Some buyers are even indicating that they won’t pay more than Eur1,650/mt,” he said.
Russian ingot was heard on offer via the trade at very competitive prices and this had also pressured prices.
“Russians have interesting prices at Eur1,650/mt delivered,” said the trader, adding that the euro/dollar exchange rate had helped.

A European diecaster said that since fixing his Q3 volumes, market prices had moved down by around Eur40 and agreed market prices had fallen to around Eur1,670/mt.
Q3 demand from two large consumers was estimated to be down around 10% over Q2 and this could in part explain the recent pressure on prices, as alloy producers competed to win orders.
“It’s true that Q3 demand from a couple of consumers was down by around 10% over Q2, but Q2 was exceptionally strong, so globally demand is exactly the same as Q3 was just an adjustment,” a Spanish producer said.
Lower prices in Europe have meant that exports to the US or directly into the NASAAC contract are once again beginning to become more attractive. The NASAAC three-months official price Friday was $1,795.50/mt, the equivalent of Eur1,604/mt.

“The weaker euro against the dollar is also making selling to the US more attractive … if European prices continue to fall another Eur20-30/mt and the NASAAC maintains the level of $1,800/mt or above we could see some of the big European players begin to export again,” the Spanish producer said.
If this happened during the slower summer months when producers and diecasters typically schedule maintenance turnarounds, the market could in theory return in September to find Europe’s 226 market much tighter and this would have a firming effect on prices.
S&P Global Platts’ weekly assessment of standard grade 226 ingot slipped Eur10 to Eur1,670-1,720/mt delivered Germany, plus credit, down from Eur1,680-1,730/mt delivered a week earlier.
Prices for 231 alloy also fell Eur10 to Eur1,710-1,760/mt delivered Germany, plus credit, from Eur1,720-1,770/mt previously.
Spot offers for the main grade of primary alloy, AlSi7Mg, also known as A356, remained steady at Eur340-350/mt plus LME high-grade primary aluminum.
SCRAP DELIVERIES AN ISSUE
High scrap costs in relation to 226 ingot sales prices have been difficult for producers to reconcile over the past two months.

“The main issue we face is the difference in the price of ingot versus scrap, so we are returning to a time where we just don’t earn any money,” the Spanish producer said. “I just don’t understand why prices are so low as activity in the automotive industry is good.”
A number of producers have said the largest problem they face is to get the scrap delivered that they have already paid for.
“We are calling the scrap dealers every day to ask them to deliver but they just keep postponing,” he said.
The German scrap buyer said they had put increasing pressure on scrap dealers to reduce prices, in line with lower 226 ingot sales numbers, but there was just no downward movement.
“We’ve pushed so hard on the scrap side but there’s been no downward movement so I see no space for more reductions in the 226 price,” the German producer said.
Market sources said that mixed turnings were currently trading at Eur1,100-1,150/mt delivered with 5% tolerance and old cast was heard at Eur1,250-1,300/mt delivered.

Scrap dealers tend to watch both the physical 226 market as well as the LME primary aluminum market to gauge scrap price direction. For several weeks primary aluminum prices on the LME have remained strong and this has bolstered scrap prices.
Last week, however, primary aluminium prices have fallen back and this could explain scrap dealers’ reluctance to sell/ship product.
The LME’s primary aluminum official cash settlement was $1,861/mt Friday, down $40.50 from $1,901.50/mt a week a ago on June 9, and $77/mt lower than $1,938/mt than four weeks ago on May 19.
AUTO DEMAND POSITIVE
“We’ve heard of a couple auto producers postponing deliveries but my customers in Germany and France are almost full of production … if demand stays like this I just don’t see any reduction,” the Italian producer said.
The latest European auto statistics showed new passenger car registrations in the EU in May rose 7.6% year on year to 1,386,818 units, the European Automobile Manufacturers Association (ACEA) said Friday.
“In volume terms, this result comes close to May 2007 levels, just before the economic crisis hit the auto industry,” ACEA said.

The five big markets performed very well last month, except for the UK.
Germany (+12.9%) and Spain (+11.2%) posted the highest percentage gains, followed by France (+8.9%) and Italy (+8.2%).
The UK market, on the other hand, recorded a decline in car registrations in May (-8.5%).
For the first five months of the year, EU passenger car registrations rose 5.3% year on year to 6,719,209 units.
Italy (+8.1%), Spain (+7.3%), Germany (+4.7%) and France (+3.3%) all saw their markets grow over the first five months of the year, while the UK registered a slight decline (-0.6%), according to ACEA figures.
Source: Platts

Read More :

The Author

Pramod Baviskar

Professional Market Trader And Owner Of Dalal Street Winners Advisory And Coaching Services. Working Since 2007 And Online Presence Since 2010. We Provide Highly Accurate And Professional 1 Entry And 1 Exit Future, Option, Commodity, Currency And Intraday Stock Tips On Whatsapp With Live Support And Follow Up.
COPYRIGHT © 2017. Pramod Baviskar. Dalal street winners advisory and coaching services. FAQ | Disclaimer | Privacy Policy       

This website is best viewed using Microsoft Internet Explorer 9 or higher, and/or latest version of Google Chrome and Mozila Firefox browsers.