Centrus says Russia canceled TENEX’s licence to export low-enriched uranium to US
Russia, the world's largest supplier of enriched uranium, said last week it had imposed temporary restrictions on the fuel's export to the US.
Annual US aluminum sales contract talks are starting later than usual this year as buyers hold off in the hope that further price declines will enable to them to get better terms.
End-users of the metal — such as beer makers, suppliers of packaging for beverages and foods, as well as manufacturers of automotive and airplane parts — and producers won’t begin their so-called mating season until September at the earliest, according to multiple aluminum buyers familiar with the negotiations who were not authorized to speak publicly about private business deals.
Each of the buyers said rising inflation, ongoing supply-chain snags and an increasing sense that the US economy is slowing is reason enough to wait a few more months to lock in agreements as they think they’ll be able to get a better price. The buyers also said they’re not concerned about securing material.
“Consumers of metal are worried about softening demand in the future — they’re starting to get worried and are becoming more conservative in their actions,” said Jorge Vazquez, managing director at researcher Harbor Intelligence, in an interview last week on the sidelines of North America’s biggest annual aluminum conference in Chicago. They will start their talks “in September and then end up closing their deals in probably November or December.”
Aluminum prices have stalled this year after a surge of more than 40% in 2021, the biggest rally in more than a decade. The metal’s weakness has coincided with slowing demand amid China’s Covid-19 restrictions and expectations of more aggressive measures by the Federal Reserve to cool inflation that’s at the highest in 40 years, which could ultimately stymie growth.
Last year, contract talks began in the summer as buyers feared major shortages caused by the pandemic would leave them without enough metal to conduct business. And it was a banner year for producers, who booked some of their greatest profit margins ever. Alcoa Corp., the largest US aluminum maker, reported gross margins of nearly 25%.
The mood was much more bearish at this year’s conference, where Harbor Intelligence warned the audience of producers, traders and buyers that the value of the metal would fall almost 20% by December.
Yet, even though multiple producers of raw materials and value-added metal voiced concerns about demand softening into 2023, they said order books right now are strong and remain full.
One of the buyers who spoke privately said producers are still throwing their weight around, ignoring the warning signs, and attempting to extract higher prices as long as possible. The buyer said in a recent discussion, a supplier refused to give them a one-year contract for aluminum, instead mandating that they must agree to a 3 to 5-year contract. As a reprieve from the historically elevated prices, the supplier offered discounts, the buyer said.
It’s a stark reversal from traditional contract offers in which a supplier agrees to one-year deals. Proof, said the buyer, that the producers know the window is closing for lofty aluminum values.
To be sure, this isn’t the case with all producers. In fact, on stage during one of the panels, Norsk Hydro ASA, one of the largest aluminum producers in the world, said they don’t think negotiations will begin early like they did in 2021.
“I don’t expect any big changes to the traditional routines,” said Tim Chimera, director of metals procurement and extrusions North America at Norsk Hydro, who also joked that it’s even less likely consumers will engage in early talks after hearing Vazquez’s bearish forecasts.
(By Joe Deaux)
Comments