Week in Review: Aluminum Premiums Skyrocket, Glencore’s Role

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Apparently it’s very expensive to get out of Detroit.

That is, if you’re buying aluminum from an LME warehouse.

As Stuart reported earlier this week, the total cost of getting aluminum out of Detroit comes to around $315 per ton. (The rent on a ton of aluminum canceled today would be around $275, until it is ready for loading onto a truck, which will cost another $39.95.) Of course, the wait to actually get the metal in your hands is roughly 410 working days – or 650 calendar days, Morgan Stanley estimates.

So what does this have to do with premiums (which have blown up to $0.19 per pound)?

Chart of the Week

Alu Premiums

Source: Reuters

The bump in premiums have less to do with smelter closures and more to do with LME queues and the stock-and-finance game.

Essentially, with “queue revenue at $315/ton and the physical premium at $419/ton, the apparent linkage between the two seems to have broken down…underlining the warning for consumers that the premium is not going to dissipate once the new [LME] rules come into force in April.”

Get the full skinny here:

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