Germany: Aluminium Alloy Ingot prices fell more than 1% in the European market last week, putting pressure on underlying premiums and the low-carbon differential. Amidst weak spot demand and dipping underlying premiums, market participants noted that a low-carbon upcharge for upstream aluminium billet required significant effort. However, Aluminium Alloy Ingot suppliers are reluctant to sell inventories at lower prices because of the bleak outlook for downstream demand. Traders claim that any deal for Aluminium Alloy Ingot is a good buy. Thus, Aluminium Alloy Ingot (A380) prices for Ex Willich settled at USD 3204/MT during the week ending December 2.

The ongoing decline in downstream demand, combined with the low-carbon differential, keeps the Aluminium Alloy Ingot market under pressure. Local Aluminium Alloy Ingot manufacturers reported that the underlying premium has dropped to its lowest level since March 2021 and is now 51% lower than the February 2022 record high. Longer term, it is a different section; manufacturers are still negotiating low-carbon differentials for 2023 contracts, but Aluminium Alloy Ingot demand is so low in the short time that it is difficult to validate a differential right now.

Meanwhile, other Aluminium Alloy Ingot traders claim that low-carbon differentials for other aluminium Value-Added Products (VAPs) like primary foundry alloy, slab, or wire rod are still achievable at stable rates, bolstering the high end of the range. It depends on the product, but for some, there is still a significant price differential for green, and consumers continue to rely on this. However, downstream demand for low-carbon primary aluminium in Europe remained strong, and several offers were on the market for 2023.

According to our sources, some restocking of Aluminium  Alloy Ingot occurred in the market last week due to low end-user inventory levels amid bearish sentiment. The traditional end-of-year restocking drive is unlikely to happen this year. Instead, due to a slowdown in Aluminium Alloy Ingot demand, any end users will likely begin their new year holidays earlier than usual. Thus,  ChemAnalyst anticipates that Aluminium Alloy Ingot prices will continue to fall in the coming weeks owing to the lower demand outlook. Prices may fluctuate if downstream inquiries return to the market in the first quarter of 2023; otherwise, prices will likely drop or remain stable at lower levels.