The news of Oetinger’s insolvency has led to a rise in ingot prices in the European secondary aluminium market.

“We’re not quite reaching the numbers we want but I think the trend will keep going for a while,” one market participant said.

“Our customers are trying to cover quantities for October and even November, but we’re not willing to offer, as we think the price will go up [further].”

Metal Bulletin’s in-warehouse Rotterdam quotation for DIN 226 pressure diecasting ingot moved up to €1,800-1,850 ($2,345-$2,410) per tonne, up from €1,750-1,810 previously, as market participants scrambled to fill orders elsewhere.

“There’s a tendency for people to ask for more, and they’re booking above €1,800. The demand is not bad,” a producer said.

“On the scrap side, my purchaser has told me it’s stable or more a bit lower. We might start to see a better margin,” he added.

It was announced earlier in the week that Oetinger, a secondary aluminium producer with a capacity of 300,000 tpy, had gone into administration, leading to widespread speculation that production would be cut.

However, it is expected that the administrators will work to try to save the company, as it is the largest foundry producer in Europe.

“It is possible [Oetinger] could re-strengthen through this procedure. There is a need for the company in the market,” a second producer said.

“There is hope for the future – perhaps with lower volumes of production, but I wouldn’t be pessimistic,” he added.

Sellers already have reported business at levels as high as €1,850 per tonne, and others have suggested prices could rise still further.

“The situation with Oetinger has created changes in the market. There were a lot of clients who were short,” a source at a refinery in southern Europe said.

“They were expecting the price to go lower, so they didn’t buy, and now they’re running behind the price. As soon as we heard the news we received a lot of phone calls.”

Margins are now improving, he added, after as much as nine months of squeezes, as scrap prices rose and ingot prices wobbled.

“We’re trying to take as much profit as possible. The first six months of this year were a disaster for us. We couldn’t work to a profit,” he said.

“We need to make sure we get a good margin now in order to be safe.”

Further consolidation in the market is also expected in the coming months, as rumours have emerged of difficulties with other major producers.

The traditional summer lull in the European market has also come into effect as plants are expected to shut down for maintenance within the next few weeks.

Claire Hack
chack@metalbulletin.com
Twitter: @clairehack_mb