European aluminum alloy spot demand slow, prices inch higher

Spot demand for secondary aluminum in Europe was seasonably low this week as inquiries slowed ahead of the summer vacations and manufacturing turnarounds. Prices in Europe have firmed slightly, consolidating the move higher after a major German alloy producer, Oetinger, filed for insolvency June 27.

The company, which produces around 300,000 mt/year of aluminum alloy, is still operating and delivering metal as normal.

The Platts assessment of the key grade -- standard 226 -- increased to Eur1,770-1,820/mt ($2,312-2,377/mt) delivered Germany, including 30 days' credit, up Eur10 at the bottom end of the range from Eur1,760-1,820/mt.

Prices for grade 231 were also flat at Eur1,780-1,840/mt delivered Germany.

A trade source confirmed that spot sales were "quiet this week" as most quarterly buyers were covered for Q3 and monthly purchases for August have already been done.

"Most buyers will be waiting until September to see what happens to Oetinger and to market prices," said the trader, who added that spot prices in Germany were either side of Eur1,800/mt delivered.

A diecaster also said that he felt producers were still trying to reach spot prices of around Eur1,800/mt delivered although it was possible to agree deals at Eur30 below this level at Eur1,770/mt. He also said that he had received some inquiries from a number of suppliers offering alloy this week: "It seems that there is still free capacity."

Market prices were around Eur1,770-1,820/mt, said one German producer, although he said there were limited volumes available at the lower end of the price range.

"Customers who usually buy 226 at very competitive prices have even paid Eur1,770/mt this week," said a second trade source. He confirmed that he had sold two small lots to different diecasters at Eur1,790/mt and Eur1,810/mt both for August delivery.

"I heard someone bought 231 at Eur1,820/mt this week for August delivery," he added.

Scrap market prices still remained relatively high although the differential between the scrap input cost and the 226 ingot sales prices has widened there have not been sufficient sales at the higher level to make a difference to many producers as yet.

ALUMETAL UPS OUTPUT

Poland's Alumetal has doubled output at its newest refinery, Nowa Sol, after starting a second aluminum alloy production line, the company said. Full capacity on the second line "will be reached within a few weeks," an Alumetal spokeswoman said Tuesday.

The second line has boosted annual production capacity at Nowa Sol to 66,000 mt. Nowa Sol started operating in July 2011 and investment in it has totaled about Eur35 million ($45 million), including Eur8 million for the second line.

Alumetal has three production sites in Poland, and Nowa Sol's second production line will bring total company capacity to 170,000 mt/year. Sales volumes in 2013 are estimated at 120,000 mt, the company said. The company sold 99,652 mt of aluminum alloy in 2012 and posted sales revenues of Eur202 million. Alumetal, the fifth-largest aluminum recycler in Europe in 2012, sells 90% of its metal to the automotive industry.