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Midwest P1020 aluminum premiums steady

Keywords: Tags  Midwest premiums, aluminum, aluminum prices, P1020, automotive, building and construction, London Metal Exchange, LME Suzy Waite


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.

AMM’s 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) March 14.

"There’s some lower numbers out there so people are coming in to buy. We’ve 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. They’re 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 11.5-cent premium.

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 near term.

"Our extruders are optimistic. They’re seeing some fairly strong business, and some tell me they’re 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 isn’t as steady, market players said.

"Europe’s a dog right now, and Asia is just constantly stop and go. I’m still trying to figure out what’s going on over there," the third trader said.

Global markets are "topsy-turvy," the second trader said, but added that it doesn’t appear to have impacted U.S. demand.

Participants agreed that a backwardation in LME spreads hasn’t deterred traders from continuing to store aluminum in LME-listed warehouses, with 40,900 tonnes of aluminum entering Detroit warehouses March 18.

"(The back) is hanging there, but I don’t think on a day-to-day basis it’s 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 contango.


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