Aluminum Drops on LME, CNBC Reporter Writes Midwest Premium Book

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CNBC reporter Kate Kelly’s book “The Secret Club That Runs the World” is being released this week. The book covers the London Metal Exchange aluminum warehouse wars of 2011 when Goldman Sachs’ Detroit Metro International Warehouse operation was able to effectively sit on warehoused aluminum and, thereby, drive up its price via the Midwest premium.

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“In addition to the revenue Metro offered, it presented Goldman with the possibility of a free look at what was happening on the physical side of commodities through ground-level operations.” Kelly wrote. “Tweaking existing contract trades in a commodity based on feedback from colleagues who worked in the physical markets was by then commonplace in banking.”

The day’s biggest mover was the 3-month price of aluminum which dropped by 1.0 percent on Wednesday, June 4 to close at $1,831 per metric ton on the LME. On the LME, the primary aluminum cash price fell 0.8 percent to $1,802 per metric ton. At INR 110.75 ($1.87), the cash price of primary Indian aluminum finished the market day up 0.7 percent per kilogram.

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Chinese aluminum prices closed flat for the day. The cash price of Chinese aluminum saw little movement yesterday at CNY 13,315 ($2,129) per metric ton. The price of Chinese aluminum scrap held steady at CNY 12,250 ($1,959) per metric ton. For the fifth day in a row, the price of Chinese aluminum billet remained essentially flat at CNY 13,590 ($2,173) per metric ton. The price of Chinese aluminum bar continues hovering around CNY 14,200 ($2,270) per metric ton for the fifth day in a row.

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