LONDON European aluminum
premiums fell further at midweek as backwardations on the
London Metal Exchange led traders to lower offers to secure
AMM sister publication
Metal Bulletins European high-grade aluminum,
minimum 99.7-percent ingot, E.U. duty-paid premium fell to $280
to $295 per tonne from $285 to $295 per tonne previously.
Its also below the Feb. 4 range of $285 to $300 per
tonne, which marked the first drop in the premium since
"The premium is certainly weaker
and people are discounting a lot to get business," one trader
Sellers, especially traders,
reported strong sales to consumers over the past week as
companies looked to secure second-quarter material or buy
additional tonnages for March.
"On Thursday and Friday last
week things started to go crazy and its spilled over into
this week as well," a second trader said, although some
producers reported lower activity levels.
"Theres not been much for
the second quarter; theres still weakness in the market,"
one producer source said.
But good consumer demand
hasnt halted the slide in premiums as traders look to
offload material ahead of backwardations in the LME forward
"The backwardations are the
reason the premiums are falling; its not just the
June/July spread, but the September/October and
December/January spreads as well," the second trader said. "Can
people live with six months of no contango? No; they will have
to sell stocks."
Other aluminum premiums are also
showing weakness, although to a lesser degree than the
duty-paid ingot premiums. The duty-unpaid premium for LME
specification P1020A aluminum settled at $208.50 per tonne
in-warehouse Rotterdam, Netherlands, March 6, down from about
$216 in mid-February.
Warehouse incentives are also
maintaining duty-unpaid premiums.
"Unpaid metal all gets put in
warehouses, and they dont need contangoes," the second
Weaker numbers were also
reported for aluminum billet, which has otherwise performed
strongly in 2013. Duty-paid extrusion billet premiums are at
$480 to $500 per tonne. "Weve not been able to break $500
for billet, and its now coming off a bit," the producer
said. "But were not unhappy with the billet bookings for
the second quarter, and theres still interest on the
Sellers have also been hit by
falling LME aluminum prices, with three-month metal ending the
LMEs official session at $1,956 per tonne March 7, down
9.4 percent from around $2,160 per tonne in mid-February.
Prices have moved according to
macroeconomic trends, but it is unlikely that aluminum will
rise much above marginal production costs (at about $2,200 per
tonne) while so much excess capacity remains in the market.
There have been shutdowns, but
not enough. "We dont like lower premiums, but were
far more concerned by the falling LME prices," the producer
said. "The cutbacks have only been a fraction of what has been
A version of this article was first
published by AMM sister publication Metal