CHICAGO Midwest spot
premiums for aluminum P1020 are holding steady, although market
players generally expect both prices and demand to pick up in
coming weeks and months.
Demand from the automotive
sector has been strong, and some market players said that even
the long-beleaguered construction sector is showing signs of a
slow but steady resumption in activity.
"Automotive and transportation
in general are extremely strong segments because of (increased
fuel economy) standards that are pushing them to use more
aluminum," one consumer said. Other markets, while not seeing
the same growth, are largely holding steady, he said.
Other sources were more bullish.
One trader said that his company had been doing "chunky
volumes" adding up to thousands of tons in recent weeks thanks
to demand in a variety of sectors, including construction. "The
jack-in-the-box has not popped open, but were starting to
see a head through the crack in the lid," he said.
The trader and others predicted
that premiums could see a slow but steady rise in coming weeks
and months, a trend they said could accelerate as business
activity picks up in spring and summer. In the meantime,
expectations about prices moving up appear to be outstripping
any big upward moves. As a result, AMM Midwest
premiums held in a range of 11 to 12 cents per pound.
Three-month aluminum settled at
$2,057.50 per tonne in Fridays official session on the
London Metal Exchange, down 2.2 percent from $2,103 at the
beginning of the week. LME-registered warehouses held nearly
5.2 million tonnes of aluminum, roughly on par with a week
earlier, the most recent exchange data show.
Perhaps keeping a lid on prices
are concerns about the debt ceiling in the United States, which
may be holding back activity by end users, market sources said,
with some noting that mild winter weather also was putting
pressure on scrap prices.
One consumer contended that
banks and traders were perhaps driving the market more than
physical users of aluminum because the contango, when future
prices are higher than current prices, has kept warehouse deals
profitable. "Traders are looking to put metal down," he said.
"And consumers are holding off until the debt ceiling works
Another trader largely agreed,
saying that the physical marketat least for the
momentwas largely treading water. "People are going to
buy what they need. They are not going to speculate," he