Midwest aluminum premiums flat

Jun 20, 2013 | 11:30 AM | Michael Cowden

Tags  aluminum premiums, Midwest premium, aluminum, London Metal Exchange, LME, aluminum prices, Michael Cowden

CHICAGO – Midwest premiums for P1020 aluminum held steady this week, but outlooks were mixed on its future direction.

AMM’s Midwest premium remains unchanged at 11.6 to 12 cents per pound.

While several market sources are predicting an increase, others question whether such a move—while possible and perhaps likely—would be sustainable.

Supporting premiums are a tight scrap market that is boosting P1020 demand as a scrap substitute, warehouse financing deals that remain profitable amid low interest rates and forward spreads on the London Metal Exchange that are in contango, and limited availability because of long queues at LME-listed warehouses, market sources said.

Several market players pointed to metal moving into Detroit at an increased clip in recent days, perhaps from other LME-listed warehouses.

"Things are quite strong. ... We saw a tick up (in business) after a slow April and May," one trader said, citing a recent transaction of 500,000 pounds at a premium of 12 cents per pound. But the trader also lamented that published Midwest premiums were generally not reflecting his company’s replacement costs.....

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