Midwest aluminum premiums dip slightly

Feb 06, 2014 | 10:55 AM | Michael Cowden

Tags  aluminum, Midwest premium, P1020, premium risk, London Metal Exchange, LME, Michael Cowden

CHICAGO — Midwest aluminum premiums may begin to fall back to earth as producers, traders and banks court physical consumers whose short-term requirements have already been met, market sources said.

AMM’s spot P1020 premium range weakened slightly to 20.5 to 21 cents per pound Feb. 5 from 20.75 to 21 cents previously.

Midwest premiums spiked to new highs this year as consumers scrambled for metal said to be in short supply because of production cuts and "disciplined" sellers who had leverage to demand premiums on top of a Midwest premium.

But such extra premiums, said at the time to be necessary to cover replacement costs, have now gone from the market as consumers and some suppliers question whether replacement metal might instead cost less in the future than it does today. ....

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