Billet Market Starts to Move Higher

We hear that spot billet premiums expressed over Midwest P1020 are starting to trade higher. This seems to be driven by several factors:

Canadian producers are imposing a $0.025 cent per pound surcharge to cover the incremental duty on billet over Midwest that is not covered in the underlying Midwest duty paid ingot price
The persistent discount of Midwest duty paid ingot versus full replacement cost is discouraging importers from supplying incremental supply to the U.S.
- Midwest is now around $0.37 over LME, which is a good $0.08 below full replacement with the Section 232 duty applied
- That means that expressed over LME, a prospective billet importer is earning $0.08 less; a $0.10-0.125 upcharge over current Midwest ingot is really over $0.02-0.045 of incremental value
There may be some production excursions at Century involving homogenization

The combination of surcharges, inadequate net premium for imports and production “hiccups” is pushing prices up.

We understand some spot transactions have been done at $0.15 and offers are inching up to $0.17 cents per pound.

Why it matters

The billet market has been quite sleepy so far in 2025, as extruders have dealt with murky sales forecasts and short lead times. While people report lots of “tire-kicking” with requests for quotations and asking about lead-times, those quotes don’t translate into committed orders. OEMs are not pulling the trigger. This has left many extruders taking minimums on their annual frame contracts up to now.

However, extruders who left more of their billet exposure to the spot market are now facing some challenges. Unless Midwest P1020 starts to reflect embedded costs, there’s not a huge incentive for importers to bring any discretionary tonnages to the U.S. For the Canadians, it’s about getting the highest netback over LME and the billet upcharge likely needs to move up equal to or greater than the discount that Midwest is trading at relative to replacement, e.g. $0.07 per pound. It’s no coincidence that the offers are now $0.17 over Midwest, that’s about $0.07 over what term contracts had been for 2025.