Matt Levine: Court Dismissal is Proof Aluminum ‘Conspiracy’ Didn’t Happen

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Bloomberg’s Matt Levine writes that there are two markets for aluminum ” One is, like, A digs aluminum out of the ground and sells it to B to make beer cans. The other is, like, C and D speculate with each other on the price of aluminum. These two markets serve different, though obviously related, purposes.”

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Levine contends that last week’s dismissal of a federal lawsuit against Goldman Sachs Group, Glencore PLC and others proves that, while prices might have gone up, there was no “conspiracy” between the two markets to drive up London Metal Exchange aluminum prices.

” …if the Midwest Premium gets too high, or fluctuates too much – then the abstract market isn’t doing its job well. The more closely the local price tracks the abstract price, the better the abstract market is doing,” he said.

Following two days of increases on the LME, the aluminum cash price dropped by 1.5 percent to end at $2,082 per metric ton on Tuesday, September 2. Weakening prices followed two days of improvement as the aluminum 3-month price dropped 0.9 percent on the LME to $2,095 per metric ton. After a 0.5 percent increase, the Indian aluminum cash price finished the day at INR 128.65 ($2.13) per kilogram.

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Chinese aluminum prices closed flat for the day. The price of Chinese aluminum scrap remained essentially flat at CNY 12,250 ($1,995) per metric ton. For the fifth day in a row, the price of Chinese aluminum billet remained essentially flat at CNY 13,590 ($2,213) per metric ton. The price of Chinese aluminum bar saw essentially no change for the fifth day in a row, remaining around CNY 14,200 ($2,312) per metric ton. The cash price of Chinese aluminum saw little movement at CNY 13,960 ($2,273) per metric ton.

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