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Aluminum premiums flat despite bullish talk

Keywords: Tags  aluminum, Midwest premium, P1020, Big Rivers Electric, Rio Tinto Alcan, Centruy Aluminum, warehouse, automotive construction


CHICAGO — Bullish sentiment about Midwest aluminum spot premiums doesn’t appear to have translated into higher prices yet.

Several market sources reported P1020 aluminum premiums in a range of 11.5 to 12 cents per pound, but most haven’t booked any business at that level this week. As a result, AMM’s premiums remain in a range of 11.3 to 12 cents per pound despite some sources insisting that prices are on the rise.

One trader said that his company had booked business in a range of 11.5 to 12 cents per pound last week but not this week.

Another market source said he was aware of 250,000 to 300,000 pounds booked in the same range but hadn’t transacted the business himself.

A producer source also said his company was turning away spot business unless the premium was at least 11.5 to 11.75 cents per pound. "We’ll make something happen at that price," he said.

The producer source wasn’t aware of any spot deals being booked at 11.5 to 11.75 cents per pound, but said his company felt no compulsion to take lower-priced deals, given a comfortable load of contract business.

The trader said he was "mildly bullish," given limited availability thanks not so much to material going into warehouses but increased demand from the physical market, including a strong automotive sector and an uptick in building and construction activity.

Premiums were pointing up as activity improves heading into the spring and as traders short metal are bidding up premiums, according to one market observer, who hadn’t conducted any transactions for metal. Also bolstering premiums is fear of a potential supply disruption resulting from power rate disagreements between Henderson, Ky.-based Big Rivers Electric Corp. and Rio Tinto Alcan’s Sebree, Ky., smelter and Century Aluminum Co.’s Hawesville, Ky., facility ( amm.com, Feb. 4), he said.

But while some sources said the market was inching upward, others said it was flat and spot activity was limited.

"It’s pretty much the same" as last week, a second trader said. His company had conducted several smaller deals at premiums of 14 cents or more per pound, he said, but acknowledged that they might not be representative of the overall market, given their size, and because his company sometimes conducts business with customers who are more sensitive to just-in-time requirements than price.


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