09 OCTOBER 2012AMM.com
U.S.aluminum premiums rose higher
Edited by : AL CIRCLE
2 min read
U.S. aluminum premiums inched higher Friday to another all-time record as supply remains tight.
Midwest P1020 spot premiums rose to 11 to 11.5 cents per pound Friday from 11 to 11.4 cents previously, with some traders reporting deals for immediate delivery as high as 12 cents per pound.
U.S. supply remains constrained as producers struggle with high costs and low aluminum prices on the London Metal Exchange, and large amounts of inventories remain locked in LME-registered warehouses due to financing deals incentivized by the contango in the market.
While nearby aluminum spreads have slipped into a backwardation recently, this won’t be enough to bring an end to financing deals and cause a rapid release of metal, market players told AMM.
While global LME aluminum stocks dipped to 4.866 million tonnes on Sept. 5, from 4.875 million tonnes a day earlier, metal isn’t moving out at a fast enough rate to affect the market.
Stocks in U.S. warehouses totaled 1,958,950 tonnes on Sept. 5, according to the LME data. This compares with 1,967,700 tonnes on Aug. 31.
The Sept. 19/Sept. 21 spread was in a $19-per-tonne backwardation Thursday, and the Sept. 19/Oct. 17 spread hit a backwardation of $12 per tonne Friday.
Most discussions this past week were centered on next year’s contracts, although one consumer reported purchasing some additional spot metal for September delivery at 11 cents per pound.
"Traders and producers are definitely quoting higher premiums, though," a consumer said.
A slight uptick in the price of aluminum this past week quashed some consumer interest, the first trader said.
Three-month LME aluminum closed Friday’s official session at $1,995 per tonne, up 5.1 percent from $1,899 on Monday but still down 15.1 percent from this year’s late-February high of $2,349 per tonne.
Midwest P1020 spot premiums rose to 11 to 11.5 cents per pound Friday from 11 to 11.4 cents previously, with some traders reporting deals for immediate delivery as high as 12 cents per pound.
U.S. supply remains constrained as producers struggle with high costs and low aluminum prices on the London Metal Exchange, and large amounts of inventories remain locked in LME-registered warehouses due to financing deals incentivized by the contango in the market.
While nearby aluminum spreads have slipped into a backwardation recently, this won’t be enough to bring an end to financing deals and cause a rapid release of metal, market players told AMM.
While global LME aluminum stocks dipped to 4.866 million tonnes on Sept. 5, from 4.875 million tonnes a day earlier, metal isn’t moving out at a fast enough rate to affect the market.
Stocks in U.S. warehouses totaled 1,958,950 tonnes on Sept. 5, according to the LME data. This compares with 1,967,700 tonnes on Aug. 31.
The Sept. 19/Sept. 21 spread was in a $19-per-tonne backwardation Thursday, and the Sept. 19/Oct. 17 spread hit a backwardation of $12 per tonne Friday.
Most discussions this past week were centered on next year’s contracts, although one consumer reported purchasing some additional spot metal for September delivery at 11 cents per pound.
"Traders and producers are definitely quoting higher premiums, though," a consumer said.
A slight uptick in the price of aluminum this past week quashed some consumer interest, the first trader said.
Three-month LME aluminum closed Friday’s official session at $1,995 per tonne, up 5.1 percent from $1,899 on Monday but still down 15.1 percent from this year’s late-February high of $2,349 per tonne.
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