(Minews):Aluminium may start to be imported into North America to satisfy current demand and take advantage of high premiums, but that will leave deficits elsewhere, a senior executive at Alcoa said.
There are stocks and metal available in North America, but high premiums may incentivise imports, Tim Reyes, president of Alcoa Materials Management, told Metal Bulletin in an interview.
“We at Alcoa have said to call us, we have metal. It doesn’t mean you will get it tomorrow but if you need it in a week or so, call,” Reyes said on the sidelines of Metal Bulletin’s 20th Bauxite & Alumina conference in Miami.
“Yet certainly from a price perspective the current premium does incentivise those who can move fast to bring metal to North America,” he added.
But because the aluminium market is in a deficit, Reyes said, moving units around from producers to different consuming markets would create bigger deficits in other markets.
“The market is going to start to draw on inventories this year, and that puts more tension on the premium, because now you’re really asking the financiers to release the metal amid still positive financing economics,” he said.
“As long as they have those economics, they’ll probably not really want to release that inventory,” Reyes added.
Aluminium premiums in January rose 70% in North America, and just 30% in Europe and Japan.
As the market entered 2014, inventories were at a low level but demand was still strong, Reyes said.
“So as people came back to the market we had weather issues, which tend to tie-up scrap. There are some logistical issues in the pipeline with weather, but as all these factors combined there was near-term demand that prevented people from getting metal quickly when they needed it,” he said.
“That created a concern that there was a real shortage of units and had a lot to do with driving premiums dramatically higher,” he added
