Thai aluminium billet market paralyzed by regional Covid outbreak

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.