ALUMINUM FOIL/SHEET
ALUMINUM REELING FROM SQUEEZE ON SUPPLY, PRICES
July 16th, 2010 / Aluminum Foil/Sheet
"Banker grab" hits with backwardation.
Aluminum locked up in long term financing deals could be released as a result of a backwardation that has emerged in the August-September forward prices on the LME, market sources told AMM.
The emergence of higher prices for August compared with September is a dramatic reversal of the healthy contango that has existed for the past 2 years and prompted the long term financing deals that tied up millions of tons of aluminum in warehouses. The financing deals only make sense when the costs of financing and rent are covered by the healthy contango.
Some banks with long positions are said to be unwilling to lend which is fueling the backwardation and leaving shorts with few options other than to release metal.
Most of the nearly 4.4 million tons of aluminum in LME warehouses and as much in off exchange deals is rumored to be tied up in long term financing deals. Aluminum is locked up and it's not available in a contango, but it will be available in backwardation the market source says.
The idea is you get more value than what is costs you, said a physical trader, describing the tactic as a "banker grab". Only banks with financial firepower would be able to create this kind of squeeze.
The backwardation may evaporate by the third Wednesday prompt dates, but there is nothing to stop another squeeze in the future market participants said.
Excerpts from American Metal Market. July 16th, 2010
ALCOA PUSHES NEW ALUMINA PRICING
July 15th, 2010 / Aluminum Foil/Sheet
Alcoa Inc is changing the way it prices alumina as its long term contracts come up for renewal, according to Chairman CEO Klaus Kleinfield.
Alcoa's long term supply contacts had priced alumina as a percentage of exchange traded aluminum, but as the contracts come up for renewal the company is pushing customers toward higher non LME linked prices.
Alcoa changed their pricing to reflect market conditions as well as underlying costs, and this had yielded a higher price percentage of LME.
Over the past decade, the LME price and cost inputs of alumina did not move in tandem. Alcoa believes it is time for the industry to develop a new price methodology going forward.
An alumina pricing index is still in development, but Alcoa reiterated this week that it will support such a pricing mechanism once it comes to fruition. They are moving toward indexed pricing as they are going into 2011.
The fear of some customers is that the information given to such an index unless it's truly transparent is always lagged for not even accurate. Customer's really unwilling to switch may be able to hold out paying a percentage of LME a bit longer but not at the 14% and lower rates that have been offered in the past contract years. Prices are going up one way or another. The 12% are not there anymore and they haven't been for years.
Excerpts from American Metal Market. July 15th, 2010
US Aluminum Premiums Climb to 43 Month HighJanurary 8, 2010 / Aluminum Foil/Sheet
North American spot aluminum premiums continue to race upward, grazing 43 month highs in the new year as reduced supply and increased demand create a feeling of tightness in the domestic market.
Fewer US imports of aluminum products are one factor behind the supply side tightness in the domestic market. Russia a top supplier of aluminum material and Venezuela's state owned producers have been curbing their North American imports in recent quarters. Even as supply continues to dwindle in the North American market, demand for aluminum is growing stronger every day.
Business has picked up over the holidays and hasn't slowed down since. Traders have seen an up-tick in interest in the first week of the year. We've had good demand. Even at the beginning of the year people are kind of restocking and responding to their orders, so it's been decent demand the trader said. "I think the growth level is coming back slowly and we're going to see improved volumes.
Today's tighter supply and stronger demand would normally drive prices on the LME higher, but sources said it is fund money, not fundamentals, currently supporting the price. Three month aluminum closed second ring trade at $2337.50 per tonne Thursday, up 3.5% from $2,259 .00 at the start of the week. The LME is going on a nice run. At these levels, it's questionable whether people can restart and make money or not. If Alcoa Inc restarts in Tennessee, if Ormet fires back up some potlines, that will put a dent in the premium market.
Excerpts from American Metal Market, January 8, 2010
Aluminum mills' upturn in orders signals bottomJune 10, 2009 / Aluminum Foil/Sheet
North American aluminum mills reported a slight but significant uptick in orders in May from the previous month, suggesting that the market might have reached bottom after nearly two quarters of slackening demand. "We are finally seeing some stabilization, some signs of maybe an increase," one aluminum trader said.
Extruded products led the charge with orders up 5.3% in May over April. Sheet and plate orders were also on the rise in May. Orders for domestic can stock increased 2.6% in May, with U.S. and Canadian aluminum mills reporting a 3% increase in demand from April. "(Aluminum's) doing really well. This has been a sharp, sharp spike and it's consolidating really nicely," one LME ring trader said.
"The U.S. government is spending money on infrastructure projects and that might be beginning to feed through to aluminum demand, but I still think recovery is a bit tenuous at the moment. The best we can say is there's been a bottoming out – we're at the end of a destocking phase," David Wilson, director of metals research at Societe Generale, said.
Aluminum stocks rose a net of 2,375 tonnes, taking total inventories in LME-approved warehouses to 4,277,775 tonnes as of Tuesday morning.
Excerpts from American Metal Market, June 10, 2009
Aleris hits back at the shareholder over financingMarch 12th, 2009 / Aluminum Foil/Sheet
Aleris International, Inc., a Beachwood, Ohio-based producer of aluminum sheet and ingot from scrap, squared off against its lone shareholder Wednesday, offering arguments to a bankruptcy court supporting the structure of proposed Chapter 11 financing for the company during its reorganization.
TPG Capital, based in Fort Worth, Texas, is the sole owner of Aleris' stock. If the dispute delays court approval of interim financing arrangements, Aleris might find it harder to emerge from Chapter 11 in good shape.
Aleris has rescheduled a hearing to approve its $1.075-billion debtor-in-possession bankruptcy loan until March 16th. Until the sum is approved, the court has given Aleris permission to draw some funds to keep the company running.
Excerpts from American Metal Market March 12, 2009
Aluminum Benefiting From Substitution: Evans.December 1st, 2006 / Aluminum Foil/Sheet
The aluminum market is benefiting from increased substitution out of copper and steel-based products in the wake of soaring prices, according to Richard B. Evans of Alcan Inc., Montreal. In the past few years and especially more recently, aluminum has benefited at the expense of steel and copper as those metals experienced enormous price jumps. The cable business is faring well as manufacturers substitute out of copper into aluminum. There also has been substitution into aluminum for cans in Europe, away from steel, and aluminum penetration rates also are beginning to pick up in the automotive industry again despite an overall slowdown in the sector.
Slowdowns in the U.S. auto and construction markets have been balanced by demand from China. Currently, China is where the growth is. China's 7.4-kilogram-per-capita aluminum use compares with between 20 and 30 kg for most Western nations.
Excerpts from American Metal Market. November 30, 2006
Panama Canal Expansion Gets ‘Go'October 30th, 2006 / Aluminum Foil/Sheet
Voters in Panama have approved a referendum for a $5.3-billion expansion of the Panama Canal, expected to double the canal's capacity by 2014. The referendum passed by a margin of 78% to 22%. The project will add a third set of locks, each 1,400 feet long and 180 feet wide, giving bigger freighters carrying up to 12,000 containers a route through the passage.
Many more new freighters being delivered are capable of carrying in excess of 10,000 containers. Ships classified as panamax-the largest ships that can navigate the canal currently-can generally carry no more than 5,000 containers. As a major corridor for delivery of copper from Chile, the project could make the transporting of metals easier by adding capacity to meet the growing demand for raw materials worldwide.
Excerpts from American Metal Market. October 24, 2006
Novelis Plans to Sell, Close Some European Operations to Cut CostsSeptember 7th, 2006 / Aluminum Foil/Sheet
Novelis Inc. is considering plans to sell its Foil and Technical Products division in Europe as part of a comprehensive restructuring program aimed at cutting costs. The struggling Atlanta-based aluminum rolled products company, will close its technology center in Neuhausen, Switzerland, and overhaul its central management and administration activities in Europe in an attempt to save up to $10 million per year. As many as 2,100 jobs could be at risk. The Foil and Technical Products division comprises three plants in Germany and one each in France, Luxembourg and Britain.
The company has been going through a restructuring process since last year in a bid to cut costs and generate profits. It sold an industrial site in Falkirk, Scotland, to Scottish Enterprise Forth Valley for $7.6 million in October 2005 and closed its rolled products plant in Flemalle, Belgium, and two packaging operations in Cruseilles, France, and Garbagnate, Italy, shortly afterwards. This year, it sold its rolling mill in Annecy, France, closed its Borgofranco secondary aluminum smelter in northern Italy and restructured foil operations in Germany.
Excerpts from American Metal Market September 1, 2006
Smelters Reduce Buying Prices For Aluminum Scrap $0.02 a Pound.August 31st, 2006 / Aluminum Foil/Sheet
Smelters that held off cutting scrap buying prices last week began lowering them this week, many lopping off 2 cents a pound for some items. Some smelters might be low-balling prices at the tail end of the summer lull in an effort to maintain margins as the auto industry's woes start to drag down the pricing of die-casting alloys.
The tea leaves from the London Metal Exchange (LME) are pointing downward for aluminum alloy. The LME's aluminum contracts generally bottomed out July 21, rebounded for most of August and have now slid back toward July's lows. Primary aluminum avoided falling quite that far. However, the LME's North American special aluminum alloy contract was nearly 2 cents below its July trough for most of last week before staging a mild recovery.
The optimistic possibility is that lower U.S. aluminum scrap prices might soften the impact of the auto industry weakness domestically. However, many market participants are braced for a further decline.
Excerpts from American Metal Market August 30, 2006
Aluminum prices hold ground despite fearsAugust 31st, 2006 / Aluminum Foil/Sheet
Despite concern that planned Midwest auto production cutbacks will eventually ripple into aluminum scrap markets, current pricing is generally flat. One smelter trimmed its price on mixed low-copper clips, but boosted old aluminum sheets and aluminum casts; while a seller in the Southeast reported prices generally up a penny. The across-the-board shifts in pricing were absent.
One factor cushioning markets against a price drop is that despite the headline-making auto production cutbacks, the automarkers are no longer the behemoths they once were. Inertia also plays a part in the current flat pricing. August traditionally is a quiet period, without ferocious bargaining.
At some yards, high prices for stainless steel scrap are pushing aluminum activity into the shadows. Some smelters are likely sitting on their hands for strategic reasons. Cutting aluminum scrap prices in a potentially weak ingot market can drag down the negotiated value of aluminum alloy.
AMM's smelter buying prices show no change for mixed low-copper clips at 78 to 79 cents a pound or for old aluminum sheets and aluminum casts at 72 to 74 cents a pound.
Excerpts from American Metal Market August 24, 2006
North America Aluminum Use Strong but Output OffAugust 30th, 2006 / Aluminum Foil/Sheet
According to preliminary estimates from the Aluminum Association, aluminum demand in the United States and Canada totaled 2.238 billion pounds in June, up 3.8 percent from last year. Exports from North America totaled 467 million pounds in June, 24.4 percent higher than last year; while imports reached 528 million pounds, up 2.6 percent from last year. Although the demand for aluminum is strong right now, the primary aluminum production in North America has declined in July, lagging by 3.8 percent from July 2005.
Excerpts from American Metal Market August 29, 2006
Aluminum alloy pricing mounts; Feb. gains seenAugust 22nd, 2006 / Aluminum Foil/Sheet
New York - the spot value of aluminum continues to climb on the back of an extremely tight scrap market. As one purchaser stated, "This market (is) like a runaway freight train.” As the market sits right now, the price is expected to continue its upward trend.
Excerpts from American Metal Market January 30, 2006
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