US imports of P1020 continue to decline as market tightens

US Census Bureau data for January showed total primary aluminum imports fell 27.6% year over year to 251,418 mt, as shipments of P1020 from Canada were down 54.8% year over year and below the 77,000 mt monthly average quota the United States Trade Representative set for September through December 2020.

Recent off-warrant stocks reporting by the London Metal Exchange showed a drop of 20% in January to 161,348 mt from September 2020.

Imports of unalloyed primary aluminum or P1020 or greater purity fell by 60% year over year in January to 86,935 mt. The drop was lead by imports from Canada down from a record high January in 2020 to 66,541 mt.

Canadian P1020 imports account for 70% of US imports and 62.8% of total primary imports based on the 10-year average.

Imports of ingots from Australia and New Zealand which usually supply the West Coast and South were down around 63% and 91%, respectively, year over year. New Zealand especially accounted for a large flow of high purity ingots, P0404, to the West Coast.

"The West Coast is still very tight on supply and trading at a premium to the Midwest as inventories in the US are running about two months' worth of supply," a trader said.

Exports from British Columbia have continued to flow mainly to Europe. Only 2,721 mt of P1020 were exported to the US in January 2021 compared to 13,180 mt in January 2020, according to Canada Statistics.

Canadian exports from Quebec were down 21.2% year over year to 142,399 mt, as P1020 exports from the province dropped by 52.37% year over year to 60,277 mt. The biggest drop came by transport by water, totaling only 11,984 mt, down 82.2% from January 2020. Transportation down the St. Lawrence River down through New York or into the ocean from Sept Iles and Baie Comeau, Quebec, is very weather dependent due to the freezing over of the river. The 10-year January average of import flows of P1020 from Quebec by water to the US is 25,398 mt.

The Platts US Midwest premium hit 17.50 cents/lb on March 10, a 17-month high.

No further updates have been made by the USTR on Canadian quotas if any will be enforced for 2021.

"Seems like the current administration we will keeping tariffs in placed at least through 2021 based on their actions so far," a second trader said.

Imports of value-added products such as billet, foundry alloys and slabs were up 26.5% year over year in January, as demand continues to firm. Shipments from Canada, Russia, UAE and Bahrain rounded out the top four spots as January totaled 164,483 mt.

Canadian exports of billet and slabs to the US totaled 87,892 mt, up 64.8% year over year, as alloyed aluminum from Canada could flow into the US duty-free and wouldn't fall under the USTR quotas that were set for 2020.

Imports of billet from Russia hit 10,981 mt in January, as total alloyed imports under HTS 7601.20 were 18,278 mt, up 446% year over year and approached 2017 levels.

The Aluminum Association reported that shipments of extruded products in January totaled 422.2 million lb, up 13.6% month over month.

Platts US spot 6063 billet upcharge hit 18 cents/lb on March 4, a record high.