* Force majeure at Alma smelter in its 3rd month
* Few North American rod makers have spare capacity to sell
* Alcoa's Massena rod output still shut after March fire
By Chris Kelly
NEW YORK, April 25 North American cable and wire
producers are buying more aluminum rod abroad at higher premiums
due to production problems at Rio Tinto Alcan's Alma smelter in
Quebec and Alcoa Inc's Massena West smelter in upstate
New York, market participants told Reuters.
Alma's rod customers have been scrambling to import raw
material, some for the first time and from as far as Southeast
Asia. Domestic rod producers have little spare capacity to fill
the gap left by the 438,000-tonnes-per-year smelter, which
slashed output by two thirds more than three months ago.
Rio Tinto cut production and declared force
majeure in early January after locking out unionized workers due
to a dispute over demands to limit the use of subcontract
workers and guarantees of a certain number of union jobs at the
There is no end in sight to the stand-off, with no new talks
scheduled with the union, a spokesman said this week.
"Right now I am buying about 60 percent of my requirements
for the United States outside of North America," said a source
at a large, international cable maker, who usually buys rod for
his U.S. and Canadian operations from Alma but has gone abroad
for the first time.
Importing is more complicated for inexperienced buyers, and
costlier with freight and customs duties, a smaller U.S.-based
cable maker and Alma customer who has shipped metal into North
The first cable maker said he is paying twice as much to
ship material from Asia-Pacific, Northern Europe, South America
and the Middle East compared with his 2012 contract levels.
"Any pounds that I can find, I am buying," he said.
Cable makers would not say how much they were paying, but
rod premiums are calculated using the Midwest ingot premium as a
That is already close to record highs at around 9-9.5 cents
per lb, up from 8 cents at the start of the year due to overall
supply tightness, with some traders saying they would not sell
for less than 10 cents.
Rod, bar and profile imports into the United States rose
more than 25 percent to over 11,400 tonnes in February from a
year earlier, data from the U.S. International Trade Commission
The race to replace Alma means desperate consumers are
buying quality below their specifications. Alma produced
high-purity rod, typically used in electrical transmission
"It's to the point where if material is coming in that
doesn't exactly meet your specs, you make it work," a physical
Alcan's North American rival, Alcoa, has sold some spare
output to Alma's customers, Timothy Reyes, president of Alcoa
Materials Management, told Reuters.
But few producers have spare output as they sell on
long-term contracts, another producer said.
Opportunities for domestic suppliers to fill the Alma gap
have been limited further by the shutdown of Alcoa's Massena
West casthouse following a fire at the end of March.
The U.S. producer continues to assess the damage, but there
is no timetable for a restart, Chris Ayers, president of Alcoa's
global primary aluminum business, told Reuters.
Massena West is smaller than Alma, with annual capacity of
130,000 tonnes, but traders said it has exacerbated tightness.