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ANALYSIS: US P1020 aluminium imports manage to rise amid tough global logistics

Highlights

P1020 imports of Canada rise to 121,462 mt

Freight remains high, logistics challenging

Primary unalloyed aluminum imports into the US increased 9.8% month on month in August to 158,979 mt, as shipments from Canada rose 5.9% to 121,462 mt, according to the US Census Bureau data released Oct. 5.

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Total P1020 imports in January-August fell 30% on the year to 1,060,627 mt.

Shipments of higher purity from origins like the UAE, Russia and India decreased by 27.9% on the month in August, with logistics issues, rising costs and regional tightness due to premiums persisting. Replacement costs in the US could be pushing around 40 cents/lb, according to market sources. The high purity sows from the UAE were still down around 41% on the year through August.

Market sources cited high freight rates and long lead times expected to remain.

Market sources also said concerns around trucking remained as certain warehouses like Owensboro, Kentucky, and in the South remained tighter than others, such as Toledo and Ohio, where the costs to move material from Midwest Terminals further inland was up well over 200% year on year. Discounts were seen of up to around 7 cents/lb, caused by long lead times of up to 12 weeks to rail inland, when usually the region is discounted by 2 cents/lb to 3 cents/lb due to freight to the Midwest.

The same data showed total primary aluminum imports under HTS code 7601 were at 320,565 mt in August, up 7% on the month and 18.77% on the year.

Shipments of P1020 or greater purity from Canada were down 27.85% year on year in January-August. August shipments by rail were down 18.87% year on year to 59,155 mt, while shipments by water were up 26.12% at 60,229 mt.

Exports of P1020 from British Columbia to the US stood at 1,094 mt in August, down around 81% on the month, as the Unifor Union and Rio Tinto reached a tentative agreement Sept. 25 for the BC Works smelter.

Canadian P1020 imports accounted for just under 76.4% of US unalloyed imports for August and 72.47% 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 has been able to sell into the US at duty-paid premium levels supporting the all-in of their aluminum. S&P Global Platts nature-based carbon credits prices have risen almost 70% through Oct. 6 since their launch on June 14.

Imports of ingot from Australia soared nearly 267% month on month at 17,091 mt in August. Imports from New Zealand fell to zero during the month, the imports accounted for some of the flow of high purity ingot, P0404, to the US West Coast.

The Platts US Midwest premium held just below the record high on Oct. 5 at 34.85 cents/lb, on tight supply throughout most of the US, high freight costs and solid demand, all expected to continue at least through the first quarter of 2022.

Solid demand for VAP

Imports of value added products, such as billet, foundry alloys and slabs, were up 38.06% year on year in August, as demand remained firm. Shipments from Canada, the UAE, Russia and Bahrain rounded out the top four as August totaled 161,586 mt, up 4.4% month on month.

Imports from Canada of billet, slabs and foundry alloys to the US totaled 99,192 mt, up 30.04% year on year, as alloyed aluminum from Canada could flow into the US duty-free and would not fall under the USTR guidance import levels set in 2020. Year-to-date imports of slabs from Canada were up just over 81% as the tight prime scrap market 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 75% year on year, year to date through August, while imports of used beverage cans were up 45%. Exports have also picked up in August up 20% from 2020.

Imports of VAP from Russia continued to flow into the US -- up around 86% year on year through August.

Platts US spot 6063 billet upcharge reached a record high of 28 cents/lb on Aug. 12, but pulled back slightly to 25 cents/lb on Sept. 2 and has remained at that level, as 2022 contract negotiations start.