NEW YORK — The majority of Midwest P1020 aluminum contracts for 2013 have now been signed, according to traders and producers.
"Business is pretty good," one producer told AMM. "We’re pretty much done with 2013 and we sold a bit of material for November and December delivery."
P1020 spot business was steady this past week, which has kept AMM’s spot premiums in a range of 11 to 11.5 cents per pound.
"We’ve been seeing a steady amount of business. We’re at 11.5 (cents per pound)," one trader said.
However, spot business is expected to teeter off soon as consumers run down stocks ahead of year-end, according to producers.
"There’s (always) the usual slowdown at the end of the year. Consumers want to have low inventories," the producer said.
Most agreed that the slowdown won’t depress premiums, which have been at record highs most of the year as traders store the metal in London Metal Exchange-listed warehouses and keep supply off the market.
Global aluminum stocks on the LME opened at 5.096 million tonnes Nov. 9, up from 5.084 million tonnes Tuesday.
Although some levels of uncertainty abated once President Obama won re-election Tuesday, sources said the outlook remains unclear with the fiscal cliff looming.
"I think there will continue to be uncertainty with this particular administration. (Obama) will bring nothing but gridlock," one consumer said.
"It’s now back to this fiscal cliff," a second trader said, adding that he doesn’t think it’s as serious as some indicate. "Some economists think a depression is coming. I don’t think it’s that dire. It’s just essentially forcing us to get our fiscal house in order. I’m OK with that."
The aluminum industry stands to benefit from a number of Obama’s initiatives. Corporate Average Fuel Economy (Cafe) regulations, for example, which require vehicles to have an average of 54.5 miles per gallon by 2025, have pushed automakers to boost aluminum usage in vehicles. Producers like Alcoa Inc. and Kaiser Aluminum Co., have invested heavily in their automotive capabilities as a result.
Still, many remain concerned about Obama’s effect on the overall economy.
"(Cafe standards) may have some traction, but more importantly will be the general health of the economy," the consumer said. "And I would say the general health of the economy is more in question with Obama."
Others disagreed.
"Some people were saying, ‘Oh my god, Obama is bad for business!’ but we’ll see. It’s not like if Romney was elected, business would have got better immediately. We’ll just have to wait and see," the first trader said.
"I will have to pay more (taxes under Obama). But I’m not going to stop buying my Starbucks because we’re at the fiscal cliff," the second trader said.