The record high premiums likely to push up aluminium supply contracts in 2015

Due to the record high spot market premiums on rising demand and supply cutback aluminium supply contracts for European consumers are expected to double up next year.

Aluminium premiums which is paid over the LME aluminium cash prices, have climbed up to a record high of $460-480 per tonne in September for duty-paid metal in Rotterdam, from $450-460 in August.

Premiums have had a 60 percent rise since the beginning of 2014 due to the rising demand and capacity cutbacks from major aluminium producers.

According to traders there is an air of uncertainty about the premiums which would most likely prompt buyers to opt for the quarterly contracts rather than locking-in yearly supply deals. Even last year the uncertainty surrounding premiums drove people to favor short term deals. Premiums were agreed around the rate of $250-280 per tonne.

The global mining community is slated to meet at the end of October during the LME Week negotiate the yearly rates but traders believe that no final contracts are likely to be fixed until November at least.

LME announced last week that their aluminium premium contracts will be a little delayed, appearing in the second half of 2015 instead of the first half. They however hope that when the contract appears it will appeal to the investors to lock in future premiums. The premiums had been very high recently due to the backlogs in the LME-registered warehouses.