Europe Al: Alloy price slips but China demand may last

European aluminium alloy prices slipped over the past week as nearby demand remains in the doldrums, but Chinese demand for alloy imports continues to provide a source of relief for producers, with more taking trials with Chinese traders and agents this month.

Argus assessed DIN 226 diecasting alloy at €1,180-1,230/t ($1,307-1,362) on a delivered basis today, from €1,200-1,250/t a week ago. DIN 231 alloy slipped to €1,230-1,280/t from €1,250-1,300/t.

The higher grade DIN 230 alloy stayed at €1,740-1,780/t, while DIN 239 alloy was unchanged at €1,700-1,760/t.

Demand remains depressed in Europe while the scrap raw material market is oversupplied with metal that previously would have made its way to China, but for China's new scrap import policy. The Chinese government implemented a new policy requiring scrap metal importers to apply for licenses to be eligible for quarterly import quotas. This restriction has led to further decline in European prices.

But Chinese demand has been a ray of light for alloy imports from European sellers. Scrap imports into China falling sharply due to its new policy means demand for secondary alloys previously produced with that scrap metal has risen, and some European producers have been selling bigger supplies into China in recent weeks.

Some doubted how long Chinese demand would last, but the consensus is moving towards an expectation that it will continue into next year, and other European producers are taking steps to secure their own sales in China.

"China is asking for offers and we are conducting trials now," one producer said. "The trend will influence the market next year."

In the UK, the Argus weekly LM 24 diecasting alloy assessment was assessed flat on the week at £1,100-1,180/t ($1,416-1,519), while LM 25 alloy prices stayed at £1,530-1,570/t and LM 6 alloy prices stuck at £1,550-1,600/t.