Secondary aluminium billet premiums narrow up; low-carbon differentials flat

Secondary aluminium billet premiums narrowed up on Thursday April 6, while aluminium low-carbon differentials for value-added products and ingots (VAPs) remained flat

Fastmarkets’ monthly price assessment for secondary aluminium billet premium, ddp Europe was $540-580 per tonne on April 6, compared with $520-580 per tonne on March 3.

Primary aluminium billet premiums in Italy and Germany finally found a floor during March after a long descent.

April aluminium price assessments

Fastmarkets’ weekly price assessment for aluminium 6063 extrusion billet premium, ddp Italy (Brescia region) was unchanged at $540-580 per tonne on April 6, but was up from $520-580 per tonne a month earlier.

“I see a positive sentiment [and] the downstream order intake is running satisfactorily,” a secondary billet producer told Fastmarkets. “I am also hearing from others that there is definitely more demand for billet and extrusions. And demand for ‘green’ billet is growing, although I have not yet noticed that people want to [open their] wallets for this.”

Some market participants said that if low-carbon upcharges for secondary billet could be achieved, it would bring the premium levels in line with primary billet values, while others continued to see both markets as being on par regardless.

A trader said that secondary billet prices aligned with primary billet “because scrap is so expensive.”

Fastmarkets assessed the aluminium low-carbon differential value-added product Europe at $5-25 per tonne on April 6, unchanged from a month earlier.

“More and more people, especially in Italy, are asking for low-carbon material and recycled material. Demand for secondary billet is getting better and will be stronger in coming months,” a source told Fastmarkets.

Demand for secondary billet is getting better and will be stronger in coming months.

The upcharge for low-carbon VAP continues to remain flat, and below the low-carbon differential for P1020, following an oversupply of billet on the market, while ingot availability in Europe has tightened since the start of the year.

Some market participants said $30 per tonne was achievable for both products, and for ingots, based on the cost of certification.

Fastmarkets assessed the low-carbon differential P1020A, Europe at $10-30 per tonne on Thursday April 3, unchanged from the previous month.

Offers were heard in the market at up to $50 per tonne again this session, amid continued concerns over low-carbon availability across the European market.

South32 confirmed to Fastmarkets in March that production issues at the Mozal smelter in Mozambique had resulted in a “reduction in metal quality,” with res some market participants to question the wider impact on low-carbon supply.

Aluminium prices impacted by tight market

The tightening market supply has seen European P1020 premiums move higher over the month.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $320-340 per tonne on Thursday, up from $300-320 per tonne one month previous.

“Many are asking for [green metal], but don’t want to pay for it,” said one billet producer. Another producer source said green ingots were “the new gold.”

Some consumers are still unwilling to pay higher prices for low-carbon material amid historically high production costs, but this could change as supply risks remain.

“Nobody is talking about low-carbon at the moment,” a third producer said. “The topic has been put in the closet for now. Everyone is more concerned about costs.”

A second trader said there had been more inquiries, however.

“We are seeing a much larger portion of low-carbon inquiries these days — it is mentioned more and more all of the time,“ the trader said. “But consumers don’t necessarily want to pay for it.

“This will change soon, [however, but] for there to be enough supply, there has to be a significant change in the upcharge - it has to increase to such a level that it will attract [green] Canadian units. Either that, or it will need to incentivize further investment [in green aluminium production],” the trader added.

Inferred low-carbon aluminium midpoint calculations

The assessments below were all calculated on Thursday, April 6.

An inferred price is a calculation using existing Fastmarkets prices, which takes the midpoint of the underlying premium and adds the midpoint of the relevant low-carbon aluminium differential.

Find out how Fastmarkets’ metals and mining price data can help you to predict market movements and understand the forces driving price volatility. Learn more.

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