US, EU PFA premiums weaken despite talk of ban on Russian aluminium

Primary foundry alloy (PFA) premiums in the US and European aluminium markets moved down in the month to Friday, October 14, amid weak spot purchasing and despite the US considering a ban on Russian aluminium

United StatesThe US aluminium primary foundry alloy silicon 7 ingot /T-bar premium dlvd dup over P1020A Midwest US declined to 28-30 cents per lb on Friday, October 14, down from 29-32 cents per lb on September 9.

The high end of the range became increasingly hard to achieve during the assessment month - despite news as it ended that the US was considering banning Russian aluminium in addition to the London Metal Exchange having begun to review keeping Russian aluminium brands in its warehouses.

The US imports more valued added aluminium products, such as PFA and extrusion billet from Russia than basic P1020 aluminium.

Yet, weak spot demand outweighed supply concerns, US market participants said, after reports of a ban on Russian material that is, as yet, theoretical, appeared on Wednesday.

Several traders said they had not had any PFA spot sales in the month to October 14.

“The last deals I heard were at 28 and 29 cents [per lb],” said one trader source, adding, “I think 30 cents [per lb] is only achievable on smaller deals.”

The minimum volume for PFA deals to be included in Fastmarkets’ assessment is 100 tonnes. Although such sales were reported at a 30-cent-per-lb premium at the start of October, by the middle of the month, producers had lowered their 100-tonne offers by at least 1 cent per lb.

“There is still limited production capacity,” said one PFA producer who, nonetheless, agreed with Fastmarkets’ new, lower range.

Alloy producers have struggled to retain enough workers during the Covid-19 pandemic, but automakers - the main consumers of PFA - have also had production problems.

Growing expectations of a recession since the middle of 2022 has further curbed auto production.

PFA also tends to track the US Midwest premium for P1020 aluminium. PFA is made in part from P1020 and the PFA premium is added to the Midwest premium.

Fastmarkets assessed the aluminium P1020A premium, ddp Midwest US, down to 20.00-22.00 cents per lb on October 14, from 21.50-22.50 cents per lb on October 11. It is now at a 21-cent midpoint - almost half of the record 40-cent midpoint that prevailed through May 3 this year - precipitated by fears of inadequate Russian aluminium supplies, since countries began to turn away from Russia after its unprovoked invasion of Ukraine.


European PFA premiums remained flat in their assessment on October 14 versus two weeks previous, linked to weaker demand, but were down in a month-on-month comparison.

Fastmarkets assessed the aluminium primary foundry alloy silicon 7 ingot premium, ddp Germany at $750-800 per tonne on Friday, unchanged from the previous session, but down from $800-850 per tonne on September 9.

Liquidity remains low on the PFA market across Europe, having dipped during the summer months and not yet revived into Autumn.

Market participants continue to closely watch developments over the possibility of restrictions on Russian aluminium.

This has increased uncertainty across the supply chain, but no official announcements have been made and short-term bearish sentiment continues to weigh on the market.

“I think it’s hard to make a judgment on products right now when there is long-term uncertainty. We’ll see what happens after the 2023 discussions,” a trader said.

Premiums in Eastern Europe were also flat, with Fastmarkets’ assessment of the aluminium primary foundry alloy silicon 7 ingot premium, ddp Eastern Europe at $750-800 per tonne on Friday, unchanged from the previous session but down from $800-850 per tonne on September 9.

Requirements from the automotive sector also remained low, amid production volumes remaining below pre-pandemic levels.

Statistics from the European Automotive manufacturers association (Acea) showing new passenger car registrations in Europe increased in August to 650,291 units, ending 13 consecutive months of year-on-year decline, but still below pre-pandemic levels, and down from July’s reading of 738,226.

Weaker aluminium premiums are also adding pressure to the PFA market with Fastmarkets’ P1020 premiums in Rotterdam down by 21% month on month.

Fastmarkets assessed the aluminium P1020A premium, in-whs dp Rotterdam at $315-345 per tonne on Friday, down from $400-440 per tonne on September 16, and down sharply from the record high of $600-630 per tonne achieved in May.

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