CHICAGO Market sources
disagree over the direction of the spot Midwest aluminum
premium, with some arguing that it should trend upward while
others expressed concerns about increased supplies colliding
with weaker demand.
premium remained steady at 11.3 to 12 cents per pound, with
business transactions reported within that range again this
"Its busy out there," one
trader source said, contending that prices were roughly in the
same range on the higher end of the spectrum but had moved up
on the lower end. The trader said he was "easily" selling
material in the range of 11.5 to 12 cents per pound and had
recently transacted "a couple thousand tonnes" at that
Some buyers might have been too
conservative in making long-term contract buys and, therefore,
were turning to the spot market to secure additional metal, the
trader said. Automotive demand remains strong, building should
pick up as spring nears, and winter weather is slowing scrap
flows, he and other market players saidall of which would
support a rise in premiums.
A consumer source said he had
recently done deals for "a couple of truckloads" at 11.35 cents
but said other buyers might be willing to pay more for prompt
metal due to the long queues at warehouses and a potentially
tight scrap market. With automotive production roughly even
with 2012 and demand from the window and door sector picking
up, premiums could well rise in coming weeks, he added.
Global stocks in London Metal
Exchange-listed warehouses totaled 5,158,025 tonnes at the
close of business Feb. 20.
But the consumer and other
sources expressed increased concern about an LME backwardation
that has spread from the summer months into the fall. Financing
deals that encourage warehousing metal are supported by a
market in a contango, and a "back" could also drive the Midwest
premium down (
amm.com, Jan. 24).
While some market players were
optimistic that premiums would hold their ground or rise,
others were cautious.
One market observer agreed that
3000- and 5000-series aluminum scrap used in rolling mills
might be tight and secondary smelters might be looking to use
P1020 instead, although he questioned automakers initial
build forecasts for 2013 and whether the market would recover
"The first half of the year, I
was more optimistic. But Im not seeing (a recovery)
materialize," he said, indicating that the "quiet" market was
tied to uncertainty over a budget deal in Washington.
LME prices are also down, with
the cash primary aluminum contract ending the LMEs
official session at $2,047 per tonne Feb. 21, down 3.6 percent
from $2,123 Feb. 15.
Alcoa Inc.s majority-owned
Aluminerie de Bécancour Inc. also should ramp up
production if a new labor deal is reached, he said. A union
negotiating committee has recommended that workers accept the
amm.com, Feb. 19).