CHICAGO Midwest aluminum
premiums rose slightly this past week after discounts subsided
in the wake of lower metals prices on the London Metal
aluminum premium narrowed to 11.45 to 11.85 cents per pound May
16 from 11.2 to 11.85 cents previously.
One trader source, echoing other
market participants, characterized the current market as
sluggish, especially for a time of year that generally sees
increased activity. But it could be a lack of liquidity that is
helping to keep premiums up, he said.
"The Midwest (premium) feels
like its under pressure ... and if you want to move big
volumes, you are going to have to give the premium
awaythats all there is too it," the trader said.
"But you cant move (premiums) when there is no
Higher premiums will generally
be the case with "piddling" volumes, the trader noted.
A second trader said his company
was able to sell a parcel of P1020 this past week at an
11.45-cent premium after a week earlier being unable to sell
that same parcel at what it considered a 0.25-cent discount to
the Midwest premium at the time. He didnt know exactly
why customers might have stopped asking for discounts this past
week, but speculated that it might have been a result of a big
decline in LME prices in the earlier part of the week.
"If price goes down
significantly$40 to $80 (per tonne)then 25 cents
(discount) on (the) Midwest (premium) might not seem as
important," he said. "Why fight for $5 (per tonne) on (the)
Midwest (premium) if $70 to $80 (per tonne) was just knocked
off the LME?"
The cash aluminum contract ended
the LMEs official session at $1,840.50 per tonne May 17.
Prices had dropped to $1,800.50 per tonne May 15, down 4.6
percent from the May 8 price of $1,886.50 per tonne.
While discounting might have
paused, few market players interpreted the trend as an
indicator of a ramp-up in activity for the coming weeks.
"Normally we see some kind of
seasonal upswing during these months. Were not seeing it
as much this year," one producer source said. However, he noted
that demand has held steady since the beginning of the
A third trader mostly agreed.
"April to June in normal times tend to be pretty decent months.
But there just doesnt seem to be as much spot demand (as
usual) right now," he said.
Building and construction "is
doing a little better" and automotive is "OK," but orders from
die casters for May and June havent come in as strong as
expected, he added.
While the market "sucks," metal
remains tight in some regions, a consumer source said. He
hasnt seen any big changes in Midwest premiums, but
voiced concern about trucking costs going forward, especially
in the South as produce season kicks into high gear.