NEW YORK Spot Midwest
aluminum premiums were stable this week, with traders and
consumers reporting steady P1020 business due to scrap
tightness and lower exchange prices.
AMMs spot Midwest
premium is at 11.5 to 12 cents a pound.
Some consumer interest was
spurred by a drop in the London Metal Exchange primary aluminum
price. Three-month metal closed the official session at $1,944
per tonne (88.2 cents per pound) March 20, down 8.6 percent
from $2,128 per tonne (96.5 cents per pound) Jan. 2 and down
1.7 percent from $1,978.50 per tonne (89.7 cents per pound)
"Theres some lower numbers
out there so people are coming in to buy. Weve done some
forward business. ... When the market drops, premiums go up,"
one trader said.
"Sometimes when the market falls
to lower levels, we see a bit more price-sensitive buying," a
second trader said, adding that receiving a 12-cent premium for
extra prompt delivery is no problem.
"Premiums are quite firm.
Theyre in the 11.5-cent range," a third trader said.
One consumer noted that the
scrap tightness has pushed him to forward buy some metal at an
Exports of scrap, together with
efforts by companies like Novelis Inc. to boost the use of
recycled content, are contributing to the scrap shortage, the
second trader said.
A reasonably robust domestic
downstream business also points to firm P1020 demand in the
"Our extruders are optimistic.
Theyre seeing some fairly strong business, and some tell
me theyre turning orders away (because) lead times are so
long," the second trader said, citing solid auto demand and an
uptick in building and construction.
"Our downstream business is
still moving," the consumer agreed.
Demand in other regions
isnt as steady, market players said.
"Europes a dog right now,
and Asia is just constantly stop and go. Im still trying
to figure out whats going on over there," the third
Global markets are
"topsy-turvy," the second trader said, but added that it
doesnt appear to have impacted U.S. demand.
Participants agreed that a
backwardation in LME spreads hasnt deterred traders from
continuing to store aluminum in LME-listed warehouses, with
40,900 tonnes of aluminum entering Detroit warehouses March
"(The back) is hanging there,
but I dont think on a day-to-day basis its having
much impact," the second trader said.
On March 20, the June 19/July 17
spread entered into a backwardation of $16 per tonne, according
to LME data. However, most other spreads remained in a