European, US aluminium PFA premiums hit new all-time highs

Primary foundry alloy (PFA) premiums reached new all-time highs in both Europe and the United States in the month to Monday March 14, following increased supply concerns in both regions related to the Russian invasion of Ukraine

Europe

European PFA premiums continued their upward momentum in the week to Friday March 11, reaching new all-time highs following Russia’s invasion of Ukraine.

PFA premiums were already high because of strong demand and increasing energy costs, with several European smelters having announced energy-related production curtailments at the beginning of the year.

Fastmarkets assessed the aluminium primary foundry alloy, silicon 7 ingot premium, ddp Germany at $900-1,000 per tonne on March 11, rising from $850-950 per tonne the previous month and the highest level since Fastmarkets began assessing the grade in 2015.

“There are some big concerns for consumers across Europe,” one trader in the region said. “[Russian producers] are a big part of the PFA and slab markets, and you have to think where the premium will go if they exit the market. I’ve heard some people offering PFA at the same level as billet premiums.”

Fastmarkets assessed the aluminium primary foundry alloy, silicon 7 ingot premium, ddp Eastern Europe at $900-1,000 per tonne on March 11, up from the previous all-time high of $850-950 per tonne achieved a month earlier.

“Right now, consumers seem to be taking a quite relaxed approach, with many already purchasing well ahead,” a second trader said.

“But if Russia bans exports [of PFA] into Europe there will be a systemic shock and the consequences will be catastrophic,” they added.

Surging costs for P1020A to use for remelt in value-added products (VAP) are also pushing production costs higher across the continent.

Fastmarkets assessed the aluminium P1020A premium, in-whs dup Rotterdam at $410-430 per tonne on Friday, up from $410-420 per tonne the previous day and rising from $360-380 per tonne one month earlier.

Market participants also said that PFA supply levels were rapidly depleting, with some concerned that additional P1020A capacity may be taken offline in favor of rising product premiums and to boost availability.

United States

The aluminium primary foundry alloy (PFA) premium in the United States reached a new all-time high on Friday, mostly reflecting greater supply concerns out of Russia and new record levels for the Midwest Premium on which this premium is based.

The PFA premium is added to the Midwest Premium (MWP) and was already tracking it to new highs in the prior in monthly assessment on February 11.

Russia’s subsequent invasion of Ukraine on February 24 prompted consumers to seek non-Russian supplies, said one supplier who reported sales at and above Fastmarkets’ latest assessment range.

Fastmarkets assessed the aluminium primary foundry alloy silicon 7 ingot /T-bar premium dlvd dup at 24-30 cents per lb on Friday March 11, up from 18-24 cents per lb on Friday, February 11.

The supplier source said he had sold material at upward of 34 cents per lb for the month. Even accounting for some unusually high freight on his sales, the prevailing range for PFA has risen—alongside aluminium, overall--he added.

Fastmarkets assessed the US benchmark aluminium P1020A premium, ddp Midwest US, at 38-39.5 cents per lb on Friday, March 11. The premium was up from 38-38.5 cents per lb on Tuesday, March 8, to a new - perhaps precarious - high.

Other sources said the PFA premium was flat or even down a notch and that they would stay on the sidelines due to a lack of spot supplies.

“I’ve had inquiries, but I have nothing to offer,” one of them said on Friday.

Contributory factors in the rising PFA premium include freight costs and delays as well as higher input costs, notably for silicon, the first source said.

Fastmarkets’ price assessment for silicon, ddp US was flat at $4.25-4.80 per lb on Thursday March 10, but not far from its all-time high of $4.75-5.00 per lb, seen at the start of the year.

“It doesn’t matter if silicon costs $4.50 or $4.60 per lb if you were paying $1.70/lb under last year’s contract,” he said.

To keep up with aluminium price trends throughout 2022, visit our base metals page.

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