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US aluminum imports of P1020, VAP decline in February, further tightening supply

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US aluminum imports of P1020, VAP decline in February, further tightening supply


P1020 imports from Canada fall on month, on the year

US spot premiums at, or just below, record highs

  • Author
  • Nick Ruggiero
  • Editor
  • Valarie Jackson
  • Commodity
  • Electric Power Energy Transition Metals

Primary unalloyed aluminum imports into the US in February totaled 134,793 mt, down 29% from January, as shipments from Canada dropped 21.4% to 86,504 mt, according to US Census Bureau data.

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Total P1020 imports from January through February jumped 67.76% to 323,838 m, the data showed.

Shipments of higher purity aluminum from origins like the UAE were dropped 49% in February from January as logistics remain challenging to start the year. Higher purity imports from Russia were only 301 mt ahead of the country's invasion of Ukraine.

In 2021, the US imported from Russia 44,311 mt of P1020 or better and 148,334 mt of value-added products, such as billets and foundry alloys.

Market sources also said barging to some warehouses like Owensboro, Kentucky, has been tough and inventories sit at only around one month of supply as traders had tried to buy into New Orleans, while other Southern and Atlantic warehouses remained tight compared with Toledo, Ohio.

Recent data showed imports of P1020 coming into Baltimore at 65,126 mt for January and February, combined with 54,365 mt coming into Detroit and 53,827 mt coming into New Orleans during the same period.

The same data showed total primary aluminum imports under HTS code 7601 were 263,191 mt in February, down 23.5% from January, but up 7.85% from year-ago levels.

Shipments of P1020 from Canada by water were down around 27% in February, while shipments by rail fell 14.4% month on month, as logistic issues remain with difficulty even getting cars.

Exports of P1020 from British Columbia to the US fell to 6,818 mt, up from 8,012 mt in January.

Canadian P1020 imports accounted for just over 64% of US unalloyed imports for February and 68.47% of the previous 10-year average for the same month. Nearly all of that material is produced by hydro-powered smelters and is considered low carbon, and fall around or below the 4 mtCO2/t level across Scope 1 and Scope 2 as Canada continues to sell into the US at duty-paid premium levels supporting the all-in of their aluminum.

Imports of ingot from Australia totaled 25,141 mt in February, a 245% jump from January. The imports, some 92% in February, accounted for some of the flow of high-purity ingot, greater than 99.8%, to the US West Coast.

S&P Global Commodity Insights last assessed the Platts US Midwest premium at 40 cents/lb April 6, holding just shy of the record high, as traders raised offers as contangos have held on the London Metal Exchange and as inventories remain lean on tight supply.

Market sources have indicated that producers have shifted some production back toward P1020 and away from value-added products as automotive demand remains stagnant.

Three-months prices on the London Metal Exchange continue to trade above the Nov. 5 low and have been supported by demand ex-China and power curbs globally with contangos supporting Midwest premium futures.

Demand is expected to remain firm in 2022, although some have expressed concerns about downstream demand destruction that has yet to be seen, along with ongoing regional tightness in aluminum supply and concerns around Russia losing its most-favored-nation status and thus increasing tariffs, especially on value-added products.

VAP demand firm/assessing Russia MFN status

Imports of value-added products, such as billet, foundry alloys, and slabs, fell 6.92% year on year in February as the demand outlook remained steady. Shipments from Canada, the UAE, India, and Russia rounded out the top four as February totaled 128,399 mt, up 17.3% from January.

Imports from Canada of billet, slabs, and foundry alloys to the US during the month totaled 83,073 mt, down 8.89% year on year, as alloyed aluminum from Canada could flow into the US duty-free.

Imports of slabs from Canada during February were down just under 4% as the prime scrap market remained tight and has forced some mills to approach the spot market for more primary and slab to keep the chemistry mix of products, and as mills look to utilize more scrap in the push to decarbonization.

Imports of industrial aluminum scrap were up 24.2% so far for 2022, while imports of used beverage cans were up 1.25%. Exports have also picked up again, up 63.82% year on year.

Imports of VAP from Russia continued to flow into the US in 2022 but were down 26.99% from year-ago levels to 13,360 mt.

The Platts US spot 6063 billet upcharge has held at a record 34-38 cents/lb since March 24 as producers were trying to tack on surcharges for hardeners, such as silicon and magnesium, to offset high input costs.