NEW YORK A pickup in
aluminum P1020 demand this week pushed Midwest spot premiums to
fresh record highs, with most participants anticipating a
further increase on the horizon.
Midwest premiums rose to 11 to
12 cents per pound from 10.5 to 11.5 cents previously.
"People came in for spot that
never buy spot," according to one trader, who sold several
hundred tonnes over the past week. "This one particular
customer serves the automotive sector. I dont know if
its a one off or a trend, but so far so good."
A second trader agreed. "Yeah
weve had a bit of business (this week.) I sold a couple
of (loads) at 12 cents yesterday," the second trader said
"Weve done a bit this week
for delivery in the next couple of months," one producer
AMM recorded trades of
approximately 2,000 tonnes of aluminum over the past week.
"I expect (premiums) will bump
up as we move along in the quarter," a third trader added.
Midwest premiums rose steadily
last year as millions of tonnes of aluminum were locked in
queues at London Metal Exchange-listed warehouses.
The contango is expected to
persist this year and keep aluminum stocks high, but Alcoa
Inc.s chief executive officer said Tuesday that there
will be enough physical demand to absorb the stocks even if the
contango disappears. (
amm.com, Jan. 9).
LME-registered warehouses held
5.2 million tonnes of aluminum Wednesday, the most recent
exchange data show, while the Jan. 16/Feb. 20 spread hit a
contango of $17 per tonne Thursday.
Still, consumers are only buying
P1020 for their immediate needs as uncertainty remains in the
market despite positive automotive forecasts.
"Weve had a mixed bag.
Yesterday we had one customer who needed additional business
for January, (but) then we have some customers who are all
covered for January and a little hesitant to book additional
business. They just dont know how January will shape up
yet," the third trader said.
"It seems like the auto guys are
doing pretty well and a lot of (producers) are shifting focus
to auto segments. But I dont get the sense that (my
customers) are overly optimistic. Its the beginning of
the year. People are still finalizing their business," the
second trader said.
"Business is OK, its not
great. Its a typical January, people are getting back
this week and putting their ducks in a row," a fourth trader
said, adding that the 3-percent rise in LME aluminum prices
this week likely curbed some consumer enthusiasm.
Three-month aluminum stood at
$2,109 per tonne in Thursdays official session on the
LME, up 3.3 percent from $2,041 per tonne on Monday.
"The markets run up, so
some people backed off. No one wants spot at these prices. Once
you see metal at $1,850 (per tonne), you dont want to buy
at $2,100," the fourth trader said.