Aug. 22 (Platts) -- Secondary aluminum alloy 226 prices remained unchanged this week in thin trading conditions, typical of the summer vacation period in Europe, sources said.
"It's a quiet market," said a trader. Italy, France, Spain, Portugal and the UK markets were said to be inactive this week because of summer holidays and factory shutdowns.
In contrast, the key European market, Germany, was very much open for business because of strong demand from the auto markets. "Some [German] foundries are testing prices for September/October and November deliveries to see if they can obtain competitive prices, but nobody is moving prices from price levels of two weeks ago," said a European seller.
The Platts physical alloy price assessment remained unchanged this week at Eur1,840-1,890/mt ($2,645-2,716/mt) delivered Germany, but was up Eur50/mt from four weeks earlier. The bulk of spot purchases were seen at Eur1,850-1,870/mt delivered Germany, sources said.
A German producer said that he had sold some trucks of 226 at Eur1,880-1,900/mt delivered Germany. But a European buyer countered that Eur1,890/mt sounded "a bit too high" and that for larger volumes he was expecting to buy in the Eur1,850-1,860/mt range.
Another large buyer said that the bulk of business was being done at Eur1,840-1,860/mt delivered, and that Eur1,890/mt seemed like "a premium." The problem buyers face is that most of the southern European producers are out of the market for the summer holidays and this has squeezed supply.
Whether prices will come under more pressure once southern European producers re-enter the market remains to be seen, sources said. "There is no cheap Russian ingot coming into the market at the moment," said a trade source, who added that earlier in the year this had pushed European prices down.
Metals prices on the London Metal Exchange fell back over the past week -- a result of nervousness over recent economic developments. "The LME has a tendency to go down and I expected lower alloy prices but they are still around Eur1,850/mt delivered Germany," said a trader. "Italy and Spain are still out and those suppliers seem fairly well booked for September so they are not in a hurry to quote," he added.
The LME official cash settlement price for aluminum alloy was set at $2,280/mt Thursday, compared with $2,275/mt August 11, and down from $2,336/mt four weeks earlier on July 22.
JAPAN DEMAND SET TO RE-EMERGE NEXT WEEK
Demand for 226 from the Japanese market was also said to be muted as automakers and die-casters close plants for summer holidays. "We don't expect any enquiries [from Japan] until next week," said a 226 supplier.
Toyota Motor and Honda Motor shut their vehicle assembly and component manufacturing plants in the country over August 11-19, as well as Asian and other major die-casters.
Tokyo trade sources said most Chinese producers were offering $2,480/mt CFR Japan for November shipments, with two producers at $2,500/mt CFR or above.
Platts assessed its China domestic ADC12 assessment at Yuan 18,450-18,550/mt steady ex-works Tuesday, down from Yuan 18,500-18,600/mt the previous week. The spot export price was kept steady $2,460-2,500/mt FOB China.
GERMAN SEMI-FINISHED ALUMINUM H1 OUTPUT RISES
Germany's rolled aluminum products output in the first half of the year was 948,152 mt, up slightly from 946,508 mt in the first half of 2010, the German Aluminum Association, GDA, said in a report this week.
German aluminum rolled products output in the second quarter was 458,460 mt, down 30,000 mt from the previous year. Production is expected to stabilize at a "high level" for the year as a whole, the GDA said. First-half extruded aluminum products output rose to 297,916 mt, up almost 8% on the previous year, the GDA said. Second-quarter output was also higher at 152,673 mt, up 5% year-on-year.
"Despite a weakening in dynamics, the GDA expects further growth over the course of 2011," said Andreas Postler, head of market analysis and statistics at the GDA. "German manufacturers of semi-finished aluminum products possess considerable competitive advantages inside Europe and around the world."
In 2010 the production of semi-finished products in Germany grew by 22% to 2.46 million mt after declining by 16% in 2009 and by 4% in 2008. Of the 2.46 million mt of semi-finished products output in 2010, rolled products accounted for 1.88 million mt and profiles 507,400 mt, according to the GDA website.
Germany produced 402,400 mt of primary aluminum and 611,100 mt of secondary (recycled) aluminum in 2010.