Spot prices for aluminium alloy 226 in Europe were little changed from their end-2006 levels this week, with market sources suggesting that the warm winter, lower London Metal Exchange aluminium alloy prices and good availability of spot 226 had prevented prices from climbing higher.
Aluminium alloy 226 ingot remained around Eur1,980-2,030/mt on a delivered German works basis, including 30-day payment terms. But, market sources agreed that some material might be available at lower levels.
A European diecaster said he had been in the spot market looking for 226 to top up his contract tonnages. "Our business is steady and orders are at a high volume," he said. The diecaster said prices on the spot market were not much changed from levels at the end of last year, and he expected them to be even lower by the end of January. "Because of the warm weather there has been no problem with scrap and the prices on the LME are lower," he said, suggesting that such factors would keep a cap on 226 prices. He said he had been very lucky to buy some 226 at Eur1,920/mt, but the current range was more realistically at $1950-2,000/mt, delivered German works with 30 day terms.
A trader agreed that 226 were still around the Eur1,990-2,000/mt level, adding that Eur1,920/mt sounded very low--"even our customers who usually pay lower levels are not buying material at that level." He said considering it was the first week of the year, spot trade was quite good. "I would have expected a higher price for January. But, there has been no snow in Germany or in Poland, or any of the eastern European countries, so there is plenty of scrap available," he said, adding that 226 was also easily obtainable. He said LME prices were not having much impact on the 226 yet and the level was not much changed from the end of November 2006--around $2,330/mt. Three-months aluminium alloy last traded at $2,280/mt at 1151 GMT on Friday. The trader noted however that the weather could change: "It will start snowing sooner or later."
Another trader said the spot market range was at Eur2,000-2,020/mt, but had heard that there were Italian producers and traders offering material at well below this level. "Lots of producers ran their plants over Christmas and New Year due to the demand for material by diecasters--so their is a lot of material around," the trader said, adding that for Q1 producers and traders were still reluctant to quote on prices as they were unsure of which direction the market would take.
Market sources agreed that business would pick up from next week when the remainder of Europe returned to the market after the Christmas holiday.
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