Platts
European aluminium premiums rise on financial trades
Edited by : AL CIRCLE
3 min read
The European physical aluminium market was quiet this week with little activity reported by market participants although premiums rose on the back of financial trades, sources said.
"Everything is going up and up. There is competition for material," one European trader said.
The trader said that premiums were as high as $230-240/mt for duty-paid plus LME cash and $190-195/mt for duty-unpaid plus LME cash.
"What I see now is everything is getting tied up in financial deals and production is being cut back. Plus, material is being directed to Asia," the trader said.
"It's a pity for the physical side, lets hope it improves soon," the trader added.
A European consumer noted the difficulty facing end-users.
"It's a new experience. It's crazy," the consumer said. "There is so much material, but none of it is available."
The consumer said that the second half of the year looked more testing for end-users as uncertainty across the eurozone looked likely to have a negative impact upon demand.
A producer said that he was currently seeing premiums around the $220/mt level for duty-paid plus LME cash.
"I had an inquiry from a big consumer who wanted 500 mt quickly. He didn't argue with $225/mt. If we had the tonnage, I would've sold," the producer said.
The producer added that he was seeing premiums for duty-unpaid at $140-150/mt.
However, the source believed that the market needed to see more production cut-backs to support LME aluminium prices.
"We strongly hope that at some point people will take a firm stance or action on cutting production. People should do it, not just talk about it," he said.
On Monday, Rusal said it was considering the curtailment of 300,000 mt to 600,000 mt of high-cost aluminium smelting capacity to start from the second half of 2012.
A second producer reported premiums for duty-paid at 250/mt plus LME cash and premiums for duty-unpaid at $175/mt plus LME cash.
"Premiums are rising, but there is relatively little going on. Consumers are waiting for a decline," he said.
The producer said that consumers were being left behind at the moment and that the tightness was being artificially caused by finance trades.
"It's a paradoxical situation. People who can afford to are financing material, but end-users don't have the financial power," he said.
The producer saw no immediate reason for this market structure to stop. "It will persist," the producer said.
Platts assessment for duty-paid Good Western, in warehouse Rotterdam was up to $220-230/mt from $210-225/mt plus LME cash. Duty-unpaid Good Western was up to $150-160/mt from $145-155/mt plus LME cash, in-warehouse Rotterdam.
A7E was also up at $150-160/mt from $145-155/mt plus LME cash, duty-unpaid in-warehouse Rotterdam. A7E FOB St Petersburg was up at $130-135/mt from $125-130 plus LME cash.
"Everything is going up and up. There is competition for material," one European trader said.
The trader said that premiums were as high as $230-240/mt for duty-paid plus LME cash and $190-195/mt for duty-unpaid plus LME cash.
"What I see now is everything is getting tied up in financial deals and production is being cut back. Plus, material is being directed to Asia," the trader said.
"It's a pity for the physical side, lets hope it improves soon," the trader added.
A European consumer noted the difficulty facing end-users.
"It's a new experience. It's crazy," the consumer said. "There is so much material, but none of it is available."
The consumer said that the second half of the year looked more testing for end-users as uncertainty across the eurozone looked likely to have a negative impact upon demand.
A producer said that he was currently seeing premiums around the $220/mt level for duty-paid plus LME cash.
"I had an inquiry from a big consumer who wanted 500 mt quickly. He didn't argue with $225/mt. If we had the tonnage, I would've sold," the producer said.
The producer added that he was seeing premiums for duty-unpaid at $140-150/mt.
However, the source believed that the market needed to see more production cut-backs to support LME aluminium prices.
"We strongly hope that at some point people will take a firm stance or action on cutting production. People should do it, not just talk about it," he said.
On Monday, Rusal said it was considering the curtailment of 300,000 mt to 600,000 mt of high-cost aluminium smelting capacity to start from the second half of 2012.
A second producer reported premiums for duty-paid at 250/mt plus LME cash and premiums for duty-unpaid at $175/mt plus LME cash.
"Premiums are rising, but there is relatively little going on. Consumers are waiting for a decline," he said.
The producer said that consumers were being left behind at the moment and that the tightness was being artificially caused by finance trades.
"It's a paradoxical situation. People who can afford to are financing material, but end-users don't have the financial power," he said.
The producer saw no immediate reason for this market structure to stop. "It will persist," the producer said.
Platts assessment for duty-paid Good Western, in warehouse Rotterdam was up to $220-230/mt from $210-225/mt plus LME cash. Duty-unpaid Good Western was up to $150-160/mt from $145-155/mt plus LME cash, in-warehouse Rotterdam.
A7E was also up at $150-160/mt from $145-155/mt plus LME cash, duty-unpaid in-warehouse Rotterdam. A7E FOB St Petersburg was up at $130-135/mt from $125-130 plus LME cash.
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