What actually makes up an aluminium foil price
Two suppliers quote the same specification three weeks apart and the numbers differ by 18%. One of them is not lying. This is where the difference lives, line by line.
A foil price is metal value + conversion cost + packaging + freight + margin. The metal component tracks the LME and is usually the largest single item; conversion covers rolling, slitting and rewinding; packaging is the carton and print. Because the metal moves daily, a quote is a snapshot with a validity window, and comparing two quotes taken weeks apart is comparing two different metal markets.
Understanding the structure changes how you negotiate. You stop arguing about the total and start asking about the parts — and the parts are where the real differences are, because metal is metal and everybody pays roughly the same for it on the same day.
The four components
| Component | What drives it | Who controls it |
|---|---|---|
| Metal value | LME aluminium price, plus regional premium | Nobody — it is a market |
| Conversion | Rolling, slitting, rewinding, energy, labour, yield loss | The supplier — this is their real cost base |
| Packaging | Board grade, print colours, carton construction | Jointly — your specification decides it |
| Freight and margin | Incoterm, route, container type | Partly you (Incoterm), partly the market |
The important asymmetry: you and your supplier have almost no influence over the first line and near-total control over the second and third. Negotiation that focuses on the metal is wasted effort. Negotiation that focuses on conversion and packaging is where the money is.
The metal component
Aluminium is traded on the London Metal Exchange, and foil prices are quoted as a premium over it. In practice a Chinese supplier references either the LME or the Shanghai Futures Exchange, depending on whether the coil is domestic or imported metal, plus a regional physical premium.
Two consequences for a buyer:
- Quotes expire. A seven-day validity is normal. Longer validity is available but the seller hedges it and prices the hedge in.
- Contract structure matters. Some contracts fix the metal price at order; others leave it open until a "pricing period" before shipment. Fixed is simpler; open can be cheaper if you watch the market.
"What metal basis is this quoted on, and what happens if the LME moves 5% before we ship?" A supplier who answers clearly has a real costing system. A supplier who says "the price is the price" is either absorbing the risk or planning to renegotiate later.
Conversion: where suppliers differ
Conversion cost is the honest differentiator. It covers the energy and labour to roll, slit and rewind, plus yield loss — the metal that becomes edge trim and offcuts.
Three things move it:
- Gauge. Thinner foil is harder to roll, runs slower and produces more pinholes. Efficiency drops.
- Width. Slitting a narrow web from a wide coil produces more trim waste. 250 mm from a 1,250 mm coil wastes more than 450 mm does.
- Length. Short rolls mean more rewinding stops per tonne. A 5 m roll costs more per metre to make than a 100 m roll.
This is why a 250 mm × 5 m roll can cost more per square metre than a 450 mm × 100 m roll, even though it contains less metal. The unit price of short, narrow product is structurally higher — and that is a fact about physics and setup time, not about anyone's margin.
How to compare two quotes properly
- Same day. Ask both on the same day, or accept that you are comparing different metal markets.
- Same specification, in writing. Alloy, gauge, width, length, core, packing, carton count.
- Same Incoterm. FOB against FOB. A CIF quote against an FOB quote is not a comparison — see FOB vs CIF.
- Same packaging. Printed cartons versus plain cartons can be 8–20% of landed cost.
- Ask for the breakdown. A supplier who will separate metal, conversion and packing is confident in their numbers.
When a price is too low
If one quote is 20% below the others for an identical specification, one of six things has changed without being said:
- A thinner gauge than specified
- A cheaper alloy (1235 instead of 8011)
- Lighter carton board, or fewer rolls per carton
- Wider thickness tolerance — a nominal 12 μm that averages 11.2
- No light-testing, so a higher pinhole rate
- A forward metal position that will not be repeatable next month
Any of these can be a legitimate commercial choice. None of them is legitimate if it was not disclosed, because the buyer is now comparing two different products and calling it a price comparison.
Frequently asked questions
Should I buy on a fixed price or an open metal basis?
Fixed is simpler and protects you from a rising market. Open can save money if you are willing to watch the LME and price at a moment of your choosing. For a first order, fix it — the certainty is worth more than the potential saving.
Why is a short roll more expensive per metre?
Because rewinding is a stop-start operation. Every roll change carries setup time and scrap, and a 5 m roll carries the same per-roll cost as a 100 m roll. The metal is cheaper; the making is not.
Does packaging really add 20%?
At the top end, yes — a six-colour printed box with a cutter blade and heavy board can add that much over a plain carton. It is also the component where you have the most control, which makes it the best place to negotiate.
Sources
- London Metal Exchange — aluminium contract specifications.
- Related: Thickness guide and MOQ explained.