Aluminum Premiums Outlook Update (September 23, 2019)

Executive Summary

USA

1. (From September 18). Strike at GM to hit demand and prices of A356.2, A380, A319 alloy units.

Shutdowns at General Motors’ plants to exacerbate downward pressure over North America’s aluminum foundry market. Workers at General Motors plants in the US went on strike on Sunday evening. We understand negotiations are currently ongoing. We estimate that around 10.6 kmton per month of aluminum foundry demand (A356.2, A380 and A319) could be lost if the strike keeps going. The GM strike is bearish for the North American aluminum foundry market which already suffers from a growing oversupply of secondary and primary aluminum units. The GM strike is even more bearish.

More details in full report.

EUROPE

2. (From September 19). European spot billet premiums for secondary units fall farther in Italy as oversupply conditions continue to bite.

Our market intel from the ground confirms that some extruders' lead times are down from 3–4 weeks to as low as 3–15 days. Moreover, we understand that Italian billet consumers seem to be exercising caution before committing to recent spot purchases as they appear to be expecting even lower premiums ahead—closer to the $300 per mton threshold in the coming weeks. As of today, Italian spot billet premiums are effectively setting the low end of the European spot billet premium range with premiums reaching as low as $310 per mton and unconfirmed offers heard even below that number.

More details in full report.