European aluminum billet premiums steady as market awaits Q4 clarity

European aluminum billet premiums held firm through the week to Sept 16, as the recent industry event in Athens brought speculation of a declining market, with purchasing trends swinging toward monthly bookings and fourth-quarter expectations still under debate.

Cheaper offers emerged during the past week in the Italian and Spanish markets, where asking premiums were reportedly heard well below $600/mt DDP, though most countered that such a level is yet to be reached.

Quotations reported by secondary producers made up the upper end of the range heard discussed, given unique pressures of procuring expensive scrap alongside high ingot premiums.

"I'll never sell below $630/mt DDP Italy [60 days payment terms], because how can I sell lower and then end up in a position where I can't buy scrap, or I can only buy at very big prices?" one secondary producer said.

Another market participant found scrap volumes to be abundant in European yards but claimed that dealers who price as a percentage of the LME were awaiting higher prices before parting with their material.

Several sellers reported that pushing for higher premiums in turn lost them volumes, as customers were then prompted to look elsewhere for better deals.

"Remelters have to reduce premiums because it's a market," a consumer said. "I can tell them either I buy 200 mt or 500 mt, and if they want, they can reduce the premium. Otherwise I will buy somewhere else."

A primary producer also kept firm on premiums, saying: "I didn't go below $600/mt DDP with a customer in Italy, and they decreased volumes. If they are not accepting these offers, it means that they have cheaper metal available to them."

A third producer had no intention of succumbing to pressure from competitive offers and follow in the same downward direction, having overbooked for Q4 and now in the comfortable position to be able afford to lose sales, if need be.

Struggles with demand kept central to discussions during the event, with a shift towards spot bookings observed amid a lack of longer-term visibility though Q4.

"I have some quantity reductions for Q4, and three or four customers are asking to fix only October or November," the third producer said. "It is going back to monthly purchasing."

"I think there will be a downtrend in premiums in the next couple of weeks," another seller said. "We have currently closed October, and some are pushing back November volumes, with December too far away. Buyers have the negotiation power."

The consumer similarly confirmed booking on a monthly basis, saying, "I see premiums flat, but if I get the smallest sense they are going up then I can act fast."

Feedback from a Middle East-based producer found that multiweek delays in shipping metal to Europe are still apparent, with transit time toward the 60-day mark. Customers, however, were not raising complaints over the longer delivery times in light of poor demand further downstream, according to the source.

One trader said longer lead times as a result of Red Sea logistical issues were allowing domestic European producers to ask for higher spot premiums, while a second trader said that downside risk was limited given that Europe is reliant on imports and levels must keep high to attract overseas flows.

Platts, part of S&P Global Commodity Insights, assessed the European aluminum 6060/6063 billet premium at London Metal Exchange cash plus $620/mt DDP Germany, on net 30-day payment terms for 60-day delivery, stable week on week.

The Italian premium assessment was also flat at LME cash plus $612/mt DDP for net 60-day payment terms.

Platts assessed the low-carbon aluminum billet premium at $620/mt DDP Germany and assessed the low-carbon aluminum billet premium at $612/mt DDP Italy. Both were on a par with carbon-unaccounted premiums.