LME Lawsuit Dismissed; Aluminum Supplies Dwindle; 3-Month Price Catches Spot

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Aluminum posted a fresh week of strong gains as supplies continued to tighten and both the warehousing and commodities trading industries got some good news as a US District Judge dismissed the lawsuit against Glencore, Goldman-Sachs and others over London Metal Exchange warehousing.

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Writing about the dismissal for Bloomberg, Matt Levine said “the point of the abstract market is to help set and hedge the price in the local market (and lots of other local markets elsewhere), so if they get too far out of whack – 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.”
MetalMiner Editor-At-Large Stuart Burns echoed this sentiment writing, “Judge Forrest does not say the banks and traders activities did not affect the market, that is a fact not even the warehouse firms themselves would deny, what she appears to be saying is that it wasn’t their intention to manipulate the price.”

Even though it was dismissed, the lawsuit tied up thousands of hours of attorneys’ time, caused the biggest shake up in the LME’s warehouse rules in decades, instigated ongoing regulatory scrutiny and polarized sectors of the aluminum industry.

The three-month price of aluminum closed right around the spot price for much of the last week as the spreads between the two narrowed.

The week’s biggest mover on the weekly Aluminum MMI® was European 1050 aluminum, which saw a 9.4 percent increase to EUR 2,489 ($3,282) per metric ton. Closing at EUR 2,774 ($3,657) per metric ton for the week, European 5083 plate rose by a slight 1.7 percent. Closing at KRW 3,740 ($3.67) per kilogram, Korean 3003 coil premium over 1050 sheet remained unchanged for the week. Prices for Korean 5052 coil premium over 1050 sheet remained constant, closing the week at KRW 3,890 ($3.81) per kilogram.

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Chinese aluminum prices were flat for the week. The cash price of Chinese aluminum closed at CNY 13,960 ($2,273) per metric ton after a flat week. Following a steady week, prices for Chinese aluminum bar closed flat at CNY 14,200 ($2,312) per metric ton. At CNY 13,590 ($2,213) per metric ton, the week finished with no movement for Chinese aluminum billet.

Following a 2.2 percent increase in the week prior, the primary aluminum cash price fell 0.2 percent on the LME last week to $2,077 per metric ton. On the LME, a 0.2 percent gain landed the aluminum 3-month price at $2,091 per metric ton. The Indian aluminum cash price traded sideways last week, hovering around INR 126.50 ($2.09) per kilogram.

The Aluminum MMI® collects and weights 12 global aluminum price points to provide a unique view into aluminum price trends. For more information on the Aluminum MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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