Ahhh, summer is finally here in Chicago.
And although the mercury may read no more than the high 50s, we know it’s time for at least something hot: Harbor Aluminum’s Outlook Summit.
Ok, ok, I may be overstating my case. Only nerds like us here at MetalMiner enjoy hearing the latest on such intricacies as contango, backwardation, the NASAAC contract, cancelled warrants, how China’s production stacks up against ROW (the rest of the world), aluminum prices…and, of course, aluminum spot premiums.
The regional costs on top of the metal delivered in aluminum contracts always attract a buzz, especially when it’s hard to figure out how increasing premiums can possibly be justified. That’s why it takes folks like Rich Markiewicz, senior consultant with Harbor Aluminum Intelligence, to give aluminum buyers the lowdown.
Basically, the dynamics of aluminum ingot spot premiums depend on the interplay of what producers, traders and consumers want – and how they perceive the market.
According to Markiewicz’s presentation, regional premiums have closely followed inventory buildups at specific LME warehouses such as Detroit and Vlissingen in the Netherlands. Spot premiums are up in most regions; for example, in the US, the current Midwest aluminum spot premium (delivered) ranges from $240-286 per metric ton.
“Your responsibility is to know your ideal customer or consumer base,” Markiewicz said. “[Aluminum spot] premium complications are always going to be there, but it’s your responsibility to act and trade on premium (cost) data.”