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European aluminum spot billet rises in January

Wednesday, Feb 07, 2018

   European aluminum spot billet premiums were higher in January than in December as spot demand increased, albeit at a slower pace than a year earlier, market sources said.

  "There is less demand compared to last January," a source said, adding that only small volumes were traded but also depending on the alloy and the sector. He reported spot premiums around $390-$400/mt for Germany delivery, net-30-day payment terms and for 15-100 mt clips.
  A producer reported a couple of spot deals for 200 mt each at a $390-$410/mt offer level premium delivered Germany/central Europe, for average net-30 terms.
  A trader said he thought a premium above $400/mt was difficult to achieve, despite greater spot demand.
  Talks on second-quarter deals have started to kick off, with the market's expectations being that premiums will remain firm on the back of good demand and a stronger euro against the US dollar.
  "Consumers will try to lock in current exchange rates in order to save money in dollars," a second source said, adding that he expected premiums close to $400-$405/mt for Germany delivery.
  The euro had strengthened to $1.24 as of 1500 GMT on February 5, up from $1.19-$1.20 at the beginning of the year.
  Premiums in dollar terms should move higher, the first source said, and added that "if we go below a $405/mt premium, then margins are reducing." "Producers are pushing for higher premiums as well," he added.
  Demand is expected to be robust for the first half of 2018, according to market sources, on solid economic growth in most sectors as the European economy has recovered.
  EU car registrations showed that in 2017 demand for cars grew by 3.4% for the fourth consecutive year, reaching more than 15 million new passenger cars registered for the first time since 2007, the the European automobile manufacturers association, ACEA said.
  Among the five big markets, Italy (7.9%) and Spain (7.7%) recorded the strongest gains, followed by France (4.7%) and Germany (2.7%).
  Ample metal availability could halt any further premium increases, however.
  "There is good supply of billets and my clients report that they have no difficulty to find metal," the first source said.
  In southern Europe, negotiations for the second quarter have started as well.
  A second trader said that his expectation for the Italian premiums was that they would end up around $390-$400/mt for net-60 payment terms.
  "We are trying to push them above $400/mt but it's very difficult," the trader added.
  In Spain, the producer said they were still checking availability to set their offer levels.

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