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European aluminum alloy: Market stable ahead of Easter holiday

Tuesday, Apr 11, 2017

Market prices for European 226 aluminum alloy ingot remained broadly steady this week as business slowed ahead of next week’s Easter break, though there were some indications that consumer buying interest may flush out some cheaper offers.

“The market is slowing down, which is normal for this time of year,” a producer said. “A lot of business was done in the last few weeks — quarterly buyers have finished, and spot buyers know what they need. Demand is dropping a little bit ahead of the holiday.”

High primary aluminum prices on the London Metal Exchange, with the market again eying a break above $2,000/mt for the first time since late 2014, failed to translate into higher alloy prices, sources said.

“We hoped to have a bit more of an increase following the strong LME, but the secondary market is still stable at Eur1,820-Eur1,870/mt,” a southern European producer said.

A second producer agreed: “I had expected that prices should be slightly higher. I think we’re competing with some stock material.”

However, a consumer source said alloy prices had peaked, reporting offer levels for 226 in the range of Eur1,800-Eur1,830/mt on a delivered basis for May.

“The highest level has been reached — I think prices will go down a little bit,” he said, adding that he would not look to book forward business for June in the coming weeks as “I think we will get better prices in May.” A trader pegged the market for 226 as “still around Eur1,820-1,850, still quite stable,” and said he booked business at prices equating to around Eur1,835/mt, delivered.

Producer sources said prices for small-tonnage prompt lots were still achievable at Eur1,850-Eur1,880/mt, delivered, and said volatile LME primary prices continued to make scrap availability problematic.

Scrap dealers watch the LME’s primary aluminum price for direction, and so far in 2017, the cash settlement price has risen sharply since the first 2017 official cash settlement price of $1,702/mt on January 3.

The LME’s primary aluminum official cash settlement was $1,929.50/mt Friday, down $17 from $1,946.50/mt a week earlier but up $82.50 from $1,847/mt four weeks ago on March 9.

“It’s difficult to find the right price for any kind of scrap,” said the second producer. “If the LME would cool down for a couple of days we could see more of a flow of material.” The S&P Global Platts weekly assessment of standard 226 grade remained steady at Eur1,820-Eur1,880/mt delivered Germany, plus credit, unchanged from the previous week.

Prices for 231 alloy also remained flat at Eur1,860-Eur1,920/mt delivered Germany, plus credit.

With the Easter holidays approaching, market activity is likely to remain subdued in the near term, sources said.

“It will be a quiet week next week. We’ll see more activity after Easter,” said the trader.

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