Novelis boosts aluminum sheet charges

Aluminum producer maps price increases on 300 and 500 series

By Tom Stundza -- Purchasing, 2/13/2008 8:17:00 AM

Aluminum producer Novelis is seeking fabrication price increases of between 1¢ and 5¢/lb, depending on the alloy, for aluminum sheet products sold in North America. The move is an attempt to defray rising costs of alloys and production. While aluminum ingot has increased by 35% over the past two years, aluminum sheet prices have increased by just 32% because of oversupply in a softening marketplace.

The Cleveland-based subsidiary of Hindalco Industries says the price increases on 300 and 500 series of sheet aluminum is in response to the rising cost of alloying ingredients, especially magnesium and silicon. Market prices for magnesium have almost doubled over the past two years to $2.55/lb while silicon has surged to $1.54/lb from 72¢ in the same period.

The price increase may not be a slam dunk, however, because of the prospects for a downturn in the U.S. economy that materially dampens demand for metals. The Standard & Poor's Rating Services credit analyst Marie Shmaruk points out that the slumping U.S. economy will impact commodities “with significant exposure to auto manufacturers and residential construction.” With nearly 50% of all aluminum output is used in transportation, building, and construction, North American aluminum sales volumes and prices have softened.