LONDON European duty-paid
aluminum premiums fell Feb. 6 for the first time since December
2011 as sellers accepted lower prices to shift material.
The duty-paid aluminum premium
of AMM sister publication Metal Bulletin
slipped to $290 to $300 per tonne from $290 to $305 previously,
while the daily duty-unpaid range fell to $210 to $225 per
tonne from $210 to $230.
Premiums fell as sellers had to
lower offers in a very quiet spot market, with much of
consumers first-quarter needs covered through short-term
contracts signed late last year.
Having done little business in
January, market participants reported decent tonnages this week
at lower premiums.
"We bought material for this
quarter at lower numbers from a trader, who took the deal
because the market is very quiet," one consumer said. "There
are still some (duty-paid) offers at $305, but no one is doing
business there now."
Additionally, a backwardation
between the June and July contracts on the London Metal
Exchange has led stockholders to sell ahead at premiums below
the top of recent ranges.
"Its a combination of
uncertainty over the forward spreads and there not being much
spot interest in either January or February. So some people are
looking to offload a bit of metal, and some companies also have
their year-end in March," one producer said.
"If (the December-to-January
spread) was a good proxy for how wide these spreads can get,
then there is clearly room for more tightness as the larger
players seek to get more material under their control," one
analyst said in a daily note Feb. 6, when the June-to-July
spread eased into a $13 backwardation in pre-market trading vs.
$17 at the previous days close.
But others are wary that some of
the lower premium offers now being seen in the market could be
"In two months, the
backwardation might not be there anymore and premiums could be
back above $300," the consumer said.
Premiums will see more upward
pressure if more buyers come into the market over the remainder
of the quarter.
"Most customers booked about 25
percent less than their budgeted needs for the first quarter,"
leaving some hopeful of lower premiums, a second producer
A version of this article was first
published by AMM sister publication Metal