What is driving the U.S. aluminium premiums up? – An Insight

Aluminium premiums in the U.S. market are logging an upward trend. They picked up last month in tandem with the rising aluminium prices and are now hovering at US$0.09 per pound. The recent surge in the metal imports is found to be supporting the premiums hike, says MetalMiner in the recent analysis.

For aluminium buyers in the U.S. market, the "all-in aluminium price" can be factored in two components: the aluminium price and the regional aluminium premiums. The latter part is basically a surcharge that consumers have to pay in addition to the prevailing market prices in order to expedite delivery of the metal stock from warehouses.

Source: MetalMiner IndX

LME aluminium prices have risen from their lows in 2015 and 2016 to a moderately high of US$1,8 70 per tonne- the highest in January, 2017. While this has brought some relief for the primary aluminium producers in the U.S. they have witnessed a significant smelting capacity reduction over the past one year. This has resulted in a supply shortfall of the metal in the U.S., which now has to rely heavily on aluminium imports to satisfy its domestic demand.

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However, the volume of imports has been found to be far exceeding what the country actually needs as a balance quantity for its aluminium downstream and end user industries. The imports- that too in disguised forms have been flooding the regional market making it all the more difficult for the metal makers to sustain in the highly competitive business scenario. They have joined in forces to fight against countries (read China) offloading the subsidized metal in the U.S.

The fight is getting more serious by the day and this is supporting the domestic aluminium premiums at their current highs. It is expected that the ongoing trade tension will keep the U.S. aluminium premiums buoyed up at least for the short term, observes MetalMiner.