Thai aluminium billet market paralyzed by regional Covid outbreak

The recent Covid-19 outbreak across southeast Asia is weighing on Thai aluminium billet demand in the region after five months of price rises, sources told Fastmarkets.

On-site labor restrictions in Thailand and the related closure of several extruder facilities in both Thailand and Vietnam due to Covid-19 restrictions have caused orders to temporarily stall followed by stock inventories inching up, sources said.

Facing uncertainty on when normal operations can resume, most sources are not in a hurry to secure spot volumes.

“I think the current [Covid-19] situation is not good. I was offered some volumes from my supplier last week, he had several thousand tonnes available now and was looking for someone to absorb [them]. This is quite unusual because supplies have been short for a long time,” a Thailand-based buyer said. 

“However, orders for extrusions have slowed and now some of my customers are requesting to delay orders, adding to my inventories. I did not bother checking for billet prices,” the buyer added.

Even as market supplies return, buyers have temporarily curbed spot inquiries. Fewer bids have emerged, worsening spot liquidity. Price indications from some consumers drifted down by $400 per tonne in July, with stalled extruder orders. 

Fastmarkets’ assessment of the aluminium 6063 extrusion billet premium, cif Thailand was flat at $360-400 per tonne on July 30, after inching up from $330-360 per tonne on June 4. The billet premium remains at an all-time high since Fastmarkets began assessing the market in February 2017.

Still, aluminium premiums lag behind markets in Europe and the United States, where prices have surged to all-time highs, competing already scarce aluminium units out of Asia. This can provide support for Thai billet prices, despite a softening in demand, sources told Fastmarkets.  

Capped premiums for Thai billets will likely make southeast Asian markets increasingly less attractive compared with the global markets. With firm demand in Europe and the US still providing support for premiums, more market supplies may be exported to these markets instead.

“Even if I had volumes [to offer] I would likely move them to Europe or even the US, considering how high premiums are there. But I am sold out,” a Singapore-based trader said.

“With high global premiums, even if freight was at $100-per-tonne, selling units outside of Asia will still be profitable,” the trader added.

Tight global supplies and firm demand in the past months have resulted into a virtual absence of spot deals in Asia being reported to Fastmarkets. Most traders have repeatedly mentioned through the months that they only have enough to meet termed demand.

At least two traders continued to maintain firm price indications despite the softer market.

What to read next
Key talking points from the 75th anniversary event of European steel distributors’ association Eurometal, held July 2-3 in Luxembourg and attended by Fastmarkets.
Fastmarkets has launched MB-AL-0424 Aluminium P1020A premium, fob Indonesia, $/tonne on July 9 due to an expected increase in Indonesia-origin aluminium exports. MB-AL-0424 Aluminium P1020A premium, fob Indonesia, $/tonneQuality: P1020A or 99.7 % Minimum Al purity (Si 0.10% max, Fe 0.20% max) in line with LME specifications. Ingot, T-bar, sowQuantity: Min 500 tonnesLocation: FOB IndonesiaTiming: […]
Fastmarkets has corrected its daily AG-PLM-0012 refined bleached deodorised (RBD) palm olein, fob Indonesia price assessment, which was published incorrectly on July 7 due to an input error.
Mexico’s production and consumption of long steel fell year-on-year in May due to weakness in the country's construction sector, but posted a month on month gain, according to the latest data from the Mexican steel chamber, CANACERO.
Charcoal-based pig iron can potentially support decarbonization strategies in the EU, despite not being widely used in the region, delegates were told at Fastmarkets' International Iron Ore & Green Steel Summit, held June 17-19 in Barcelona.
To increase the transparency of our methodology, Fastmarkets clarifies that the quotation period of the MHP nickel payable indicator is the month of delivery, or the month M. Any data points Fastmarkets received otherwise will be normalized to the M month based on the monthly spreads of the prevailing exchange-traded Class-1 nickel reference price, or […]