Spot prices for aluminium alloy 226 in Europe were firm, yet broad ranging this week, with producers and consumers still uncertain over which direction the market was expected to take going in to 2007, traders, producers and consumers told Platts.
Aluminium alloy 226 ingot was mostly heard around Eur1,980-2,030/mt on a delivered German works basis, including 30-day payment terms, increasing on the bottom end of the range from Eur1,950-2,030/mt in the week of November 24. Three-months aluminium alloy on the London Metal Exchange last traded at $2,330/mt at 1300 GMT Friday.
A consumer source said demand had picked up, despite the approach of the year-end. "The physical market is strong. There is higher demand--I think people did not buy enough," he said, adding that demand for the first quarter was also strong with people trying to get material before the snow and ice of the European winter set in.
A large European consumer said this week that he had booked his Q1 requirements at just under Eur2,000/mt with terms. "But demand is nothing surprising," he said, adding that perhaps 226 demand was being driven for a higher demand for cars in Germany ahead of the tax increase to 19% from 16% due next year. "But at this stage we are not sure what demand is going to be like next year," he said, adding that even some of the larger smelters did not want to sell large quantities because they were nervous over which direction the market would take next year--"the LME position is uncertain and volatile."
A trader source said prices for spot 226 were definitely higher. "People don't know what is going to happen with demand or the weather," the trader said explaining that not only were snow and ice a problem for logisitics, but if the scrap stored outside was buried in meters of snow it would have an impact on the price of 226. He said the tighter availability of scrap as a raw would bump up prices. "The times of prices at Eur1,950/mt have passed. No one can buy at this level anymore," he said, adding that supply should remain quite steady as many plants were not expected to shut over the December period.
He said further that 226 prices were expected to keep climbing on the back of higher LME and scrap prices. "So far there is no proper winter in Europe, but it will come," he added.
A third trader said 226 prices were moving in a wide range, while for the first quarter prices were at Eur2,010-2,050/mt. "Customers have said that the first qaurter is the most erratic and difficult time for them," the trader said, adding that producers too were hesitant to quote for large quantities.
Meanwhile, a Spanish producer said 226 prices were lower at around Eur1,930-1980/mt in Spain. "Nobody wants to hear anything about more than Eur2,000/mt. The market is weak," he said, adding that he was waiting for the new year and hoping it would be "as good as this one for refineries and even better for the foundries."
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