The European aluminum market saw steady premiums last week

The European aluminum market saw premiums remaining firm last week, with lower prices on the London Metal Exchange, physical tightness and the start of the second quarter bringing consumers back into the market.

“The lower LME price is attracting consumer buying,” said a European trader. “There is more back-to-back business.”

A producer agreed and said he had seen an increase in the number of inquiries over the past week and that the European market was definitely tighter on the supply side. “Volumes are up and there are more inquiries. Customers need the material and we are already seeing tightness,” he said.

The producer said there is not a lot of material being imported into Europe and that, with production cutbacks at some European smelters, there was the feeling that availability of material was low. “Imported volumes are being picked up by financial traders and some export material is staying in the US,” the producer said.

The trader said he was doing “bits and pieces” with premiums for duty-paid at $200-210/mt plus LME cash, and duty-unpaid at $135/mt. “Small tonnages of 2,000-2,500mt. Not fantastic volumes, similar to volumes in the first quarter,” he said.

However, a second producer said there was still a little bit of uncertainty in the market and that he was seeing premiums at $195-205/mt for duty-paid and $135-145/mt for duty unpaid. “Visibility is short. I think things have peaked a bit,” he said.

The producer said he would have a better idea on the direction of the market after the Easter break and that he had not seen much of an increase in demand so far in the second quarter. “Normally, we would see a strong quarter, but last year it tailed off after the first quarter,” he said. He added that premiums had gone up quickly this year due to financing deals, but agreed that there was not currently a lot of material available in the physical market.

A second trader was significantly more bullish on the current market outlook and said premiums were as high as $235/mt for duty-paid and $145-150/mt for duty-unpaid. “Premiums are moving up; it’s difficult to source material,” the second trader said. “It is a fact now,” the trader added.

The first producer said he believed the market would see a significant improvement to demand at the end of the year and that there was more optimism developing in the market. However, the second producer was less enthusiastic. “I don’t want to predict anything. Everything is so uncertain,” he said.

The Platts assessment for duty-paid Good Western, in-warehouse Rotterdam, held steady last week at $200-210/ mt plus LME cash. Duty-unpaid Good Western was unchanged at $135-145/mt plus LME cash, in-warehouse Rotterdam, with A7E unchanged at $135-145/mt plus LME cash, duty-unpaid in-warehouse Rotterdam, and $110-115/mt plus LME cash FOB St. Petersburg.