US secondary aluminum alloy prices stable despite uncertainty

US secondary aluminum alloy prices remained relatively stable on Monday, although there was quite a bit of uncertainty in the market as LME warehouse stock levels have been declining and as the future of the US automotive market remains tentative. The Platts A380 price remained at 59-61 cents/lb, delivered Midwest, as of Monday. To help support prices, producers are taking furnaces offline amid the weak demand environment. "We all know there's no business out there," said a producer. "The whole world is running at 60%." Added a broker: "Something has to happen with the automotives. The government has to back the suppliers. The automotives are losing so much money, it has to be resolved pretty quickly." He added that several diecasters "are hanging by a thread and credit insurers are red lining the whole industry. This really poses a problem for the smelters -- they are dying." He agreed with the producer, "No one is running more than one furnace. There's just no business out there." A producer said he had done "a little bit here and there" on A380 and sold last Friday at 61 cents. Another producer said his customers were buying hand to mouth and not giving much lead time. A third producer was holding the line on A380 prices at 62 cents, based on current scrap prices. But a diecaster countered: "How can they raise prices when there is no demand -- all of us have alternatives." Another diecaster paid 59 cents for net-60-day-payment terms and said the company is "just buying what we need." The diecaster said there is a struggle in the market as some of the diecaster's OEM customers have asked for 90-day-payment terms, while smelters are pushing or 30 days or less. A third diecaster was offered metal at 60 cents, but said. "We can't pay that." He was buying LME NASAAC material at 53 cents, including 6.5 cents delivery charges. As the spread between the Platts A380 and LME NASAAC prices has widened -- to 13.5 cents as of Monday -- large users are seeking warehouse material. Warehouse stock have declined to 235,140 mt as of March 16, steadily declining from 238,940 mt on March 2, 242,700 mt on February 17 and 245,320 mt on February 3. The third diecaster said he saw no forthcoming improvement in demand. "We are shipping less in March than in January or February. He said the automotive companies has 161 days of supply on hand, as opposed to a typical 60 days. "I do not see how things can improve," he said. Producers have said there is so much uncertainty with customer requirements "that nobody is willing to go out for extended period of time, even if the numbers are attractive." On the positive side, a producer said he has been "quoting quite a bit and our shipments have picked up slightly." A scrap buyer for a smelter said he has not seen a lot of demand for scrap but did pick up mixed loads at 33 cents/lb and straight loads of old sheet at 35 cents. He said there has been tremendous competition from China, and he suspected that 90% of all US old cast and old sheet is going to China. "Every vendor I talk to is doing that [sending material to China]," he said. The buyer said the higher scrap prices "do not work" at a 59-61 cents A380 price. He said instead, "we are buying our own ingot out of the LME. It's 7 cents cheaper than if we bought scrap to make A380. Our scrap source is the LME ingot," said the buyer. "If you buy it out of the LME, it's already alloyed. Alloying costs add another 4 cents. Mathematically, it's a no brainer." However, a producer said obtaining any metal out of NASAAC is cumbersome and time-consuming. "It's a week before you can get any material," he said, adding that his 62 cents quote would be for next-day delivery. On scrap, the Platts old cast and old sheet prices moved up a penny to 65-68 cents and 34-36 cents, respectively.