Executive Summary
USA
1. (From May 17). Canada to be exempted from Section 232 Tariffs in exchange for stricter imports controls and implicit soft quota; limited downside for MW premiums seen.
The US and Canada issued today a joint statement confirming: a) the removal of US Section 232 Tariffs on steel and aluminum imports from Canada within 48 hours; b) the implicit imposition of a soft quota (a 10% duty could still be charged if Canadian exports of aluminum to the US increase meaningfully beyond historical volumes); and c) prevention of unfair imports and strict control of transshipment. We expect limited downward pressure on aluminum premiums.
More details in full report.
2. (From May 14). CME MW duty-paid financials for H2 2019 increase to a nine-month high of 18.58 cent/lb.
Preliminary data indicates that CME MW duty-paid premium financials for H2 2019 increased today to nine-month high of 18.58 cent/lb, up 0.07 cent/lb from Thursday (when the most recent volume was transacted for this period) and 0.21 cent/lb higher than a week ago. Today’s preliminary transacted volume for H2 2019 contracts was equivalent to 2,750 mton. US MW duty-paid financials backwardation has narrowed.
More details in full report.
EUROPE
3. (From May 17). EUROPEAN BILLET ALERT. Fight for Q3 contractual billet market share intensifies on regional oversupply; Italian spot premiums for primary/secondary billet decline further.
Regional fight for Q3 contractual market share seems intensifying with several Tier 1 and Tier 2 suppliers increasingly becoming more “creative” to attract contractual billet volumes. In more detail, we understand: a) Some suppliers have started to offer monthly pricing flexibility more broadly into the market; b) Some suppliers have started to offer billet with extended payment terms; c) Aggressive marketing of some Tier 1 billet units has caused these to be sold in faraway European markets. Moreover, some primary billet producers seem to be dealing with higher-than-expected billet availability.
More details in full report.
ASIA
4. (From May 17). MJP PREMIUM UPDATE. MJP spot premium falls back inside the long- term equilibrium range of $70–$100 per mton amid weak demand conditions.
HARBOR’s MJP (Main Japanese Ports) CIF P1020 ingot spot transaction premium dropped today to $90–$100 per mton from $95–$110 per mton amid thin spot activity taking place within the new range. As of today, MJP spot premiums fell back to the high end of HARBOR’s estimated long-term equilibrium range of $70–$100 per mton. Market sources from the ground indicate that demand for offshore spot units has been quiet in recent weeks, mainly as a result of consumers seemingly well stocked for this time of the year. Japanese aluminum semis shipments and primary aluminum demand continue in contraction as economy deteriorates.
More details in full report.