Billet Premium Spread Narrows to $276 per Tonne
The aluminium billet-to-P1020 premium spread fell to $276.25 per tonne on October 28, 2026, its lowest level in recent months.
Updated on Nov. 3, 2026 in Economic Indicators
The spread between Fastmarkets aluminium 6063 extrusion billet premium and the P1020A duty-paid Rotterdam premium narrowed to $276.25 per tonne on October 28, 2026. The P1020A duty-paid premium firmed to $560.00-595.00 per tonne the previous day.
Why it matters
The narrowing reflects a rapid response in billet and P1020 premiums to the 2026 supply shock, with higher premiums drawing billet from a wider range of origins into Europe and encouraging domestic production. Uncertainty over US-Canada tariffs has added to tightness in the duty-paid market.
The billet-P1020 spread fell to $276.25 per tonne on October 28, 2026, a 58.2% decline from its 2026 high of $661.25 per tonne, while LME aluminium inventories stood at 231,675 tonnes on October 29, 2026, compared with 913,200 tonnes on December 10, 2021. Traders estimate average billet conversion costs at around $300-350 per tonne, and it remains unresolved whether the spread will reach parity.
The details
Fastmarkets assessed the North Germany billet premium at $1,175.00-1,250.00 per tonne on May 29, 2026, up 109.1% from February levels. Potential US tariff changes could further restrict P1020 availability by encouraging Canadian units to return to the US market.
Timeline
February 27, 2026: North Germany billet premium was $560.00-600.00 per tonne.
May 29, 2026: North Germany billet premium assessed at $1,175.00-1,250.00 per tonne.
August 7, 2026: Billet-P1020 spread reached its 2026 high of $661.25 per tonne.
August 21, 2026: P1020A duty-paid premium fell to $460.00-500.00 per tonne.
October 28, 2026: Billet-P1020 spread narrowed to $276.25 per tonne.
Market Dynamics
The current narrowing of the billet-P1020 spread is comparable in direction to the 2021-23 contraction, when the spread fell by $901.25 per tonne to $300 per tonne on February 3, 2023. Average billet conversion costs of roughly $300-350 per tonne, up from about $250 previously, suggest the spread may be stabilizing near a higher cost floor.
Premium movements in aluminium feed into the cost of extruded products, so shifts in billet and duty-paid premiums can flow through to manufacturing and construction input prices over time. Buyers of aluminium-intensive goods may see these changes reflected in supplier pricing as contracts are renegotiated.
The takeaway
Tracking the spread between billet and duty-paid premiums offers an early read on regional aluminium tightness and tariff effects. Watch for shifts in US-Canada tariff policy, which could reverse the current narrowing.
Further reading
For more on the market signals behind this shift, see Economic Indicators.
