Aluminum Premiums at All-Time Highs; 3-Month Aluminum Price Down

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Woofta, these numbers are high…”Aluminum premiums, or costs to get metal out of storage, have soared to all-time highs in the United States with Europe and Asia close behind as smelters shut and spare metal is snatched up by traders for collateral in financing deals,” reports Reuters.

“The rise in premiums highlights the London Metal Exchange’s (LME) limited ability to cool a market where low interest rates continue to whet appetites for locking up aluminum as a form of investment.”

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The LME, “announced big changes to its metals storage system in November after years of complaints…It outlined plans to slash waiting times to a maximum of 50 days, among other measures, which analysts and manufacturers had hoped would lead to lower premiums especially given that the aluminum market is oversupplied.”

“But the benchmark Platts U.S. Midwest aluminum premium jumped by three U.S. cents per pound to 15 U.S. cents per pound of metal over the LME cash price late last week, the pricing agency said.”

“‘The fact that we are still trading at 15 cents today suggests that this was not a fluke and that we will likely stay at elevated levels for some time across all geographies,’ INTL FCStone analyst Ed Meir said.”

In other metal price news for aluminum…

With a decline of 1.4 percent on the LME to $1,761 per metric ton on Tuesday, January 7, the aluminum 3-month price recorded the biggest decline of the day. The cash price of primary aluminum continues its trend downwards. Finishing the day at $1,717 per metric ton, it dropped 1.2 percent on the LME. The cash price of primary Indian aluminum rose 0.1 percent.

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Chinese aluminum closed mixed on Tuesday. Chinese aluminum scrap closed 0.6 percent lower. Tuesday saw the Chinese aluminum cash price drift down 0.1 percent after three quiet days. For the fifth day in a row, the price of Chinese aluminum billet remained essentially flat. The price of Chinese aluminum bar held steady.