Aluminium duty cut proposal could get EC green light on Jan 10

There could be further clarity on the future of the European Commission's proposal for a two-phase cut to the European Union's 6% unwrought aluminium import duty as soon as January 10, when the commissioners are due to meet for the first time since the proposal was made available to the cabinets for the comments on December 22.

A commission spokesman told Platts late Wednesday that the written procedure document was opened for comments on December 22 and would close on January 9--ahead of the 2007's first College Meeting on January 10. She said at this meeting an announcement could be made on whether the proposal would go ahead to the member states for voting and the future of the proposal would be more clear. "It is in the final stage of the procedure," she said, adding that commissioners would need to have major objections for the proposal not to go ahead.

The proposal the EC is working on involves an initial cut to 3% from 6% in January and a subsequent reduction to zero in 2009. And, while it was believed that most of the eastern European countries were pushing for the duty cut, others like Germany, France, Spain and the Netherlands might be opposed to the cut.

Meanwhile the uncertainty in the market as a result of the proposed cut has caused havoc in the European aluminium physical market, having a marked impact on spot premiums and contract negotiations.

"It is a big mess. I will be glad when it all ends--everyone is hesitating, no one knows what to do," a consumer source said Wednesday.

"People are still hesitant to buy with the pending duty situation," said a European trader source, adding that on contract he was offering unpaid plus 6% with the retroactive option to claim back the difference if there was a change. "Most traders and consumers expect the cut to happen, which makes it hard to quote for Q1. Some producers are being pressured lower to quote at unpaid plus 5%," he added. A producer-buyer said the market was in "wait-and-see" mode due to the looming duty cut. "Premiums have softened and there is also not much being offered. It also depends on whether people are at financial year end, some may be trying to close their books and get rid of material," he said.