European aluminium billet premiums retreat from April 2015 highs

Aluminium billet premiums have dipped from recent three-year highs following the US Treasury Department’s decision to extend the wind-down period for Rusal contracts.

Metal Bulletin’s aluminium billet premium hit its highest since April 2015 following the original announcement of sanctions against UC Rusal.

The premium in Germany for prime-quality billet delivered duty-paid on a spot basis into the Ruhr region with 30-day payment terms soared to $560-600 per tonne in Metal Bulletin’s twice-monthly assessment on April 20.

But since Monday’s announcement that those involved now have until October 23 to wind-down their Rusal contracts, there has been a slight retreat in billet prices.

“The original panic has calmed and last week we were seeing crazy numbers. Now things have come off by $100 or $200 per tonne,” a producer said.

Since the latest assessment on April 20, business has been recorded for billet premiums in North Germany at $450 per tonne, with other market sources saying they have booked business at $400-$440 per tonne.

“On Friday, I was offering metal in Italy at around the $580 per tonne level, now I would be happy to get $450 per tonne,” a trader said.

The billet premium in Italy rose to $540-580 per tonne on April 20 from $385-400 per tonne the month prior, with some offers heard as high as $600 per tonne last week.

“No-one is offering at $600 per tonne in any region any more, that’s for sure,” a second trader said

“For sure it has come down, the LME [aluminium] price is still high but lower than its $2,700 per tonne last week. And we no longer have people scraping around for metal before June,” he added.

With the market now allowed to receive Rusal material until October, there has been some respite, but premiums could still return to higher levels as the deadline draws closer.

“All you’re doing is kicking the can down the road,” the first trader said.

“Ok, people are not trying to get material for the third quarter, but eventually they will need it for the fourth quarter and to start negotiating next year’s contracts and then we will be in exactly the same position as we were a few months ago,” a third trader said.

Metal Bulletin’s next assessment of North Germany and Rotterdam billet premiums is on Friday May 4, with the monthly Italy, Spain and Turkey billet premiums assessed on Friday May 18.

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