aluminum consumers expect 2014 supply negotiations to extend
into the fourth quarter, well beyond AMM sister
publication Metal Bulletins International
Aluminum Conference in Geneva, Switzerland, later this month,
due to uncertainty over premium levels.
"Normally we book all
volumes that are strategically important at the conference, but
we might take a different approach this time," one consumer
This year, falling
premiums will stay consumers hands. The London Metal
Exchanges proposed changes to warehouse load-out rates
have caused those warehouses offering incentives for metal
deliveries to slash their offers, and premiums have started to
Bulletins European duty-paid aluminum premium stands
at $245 to $265 per tonne, down about 10 percent since the LME
announcement at the beginning of July (amm.com, July
5). Duty-unpaid premiums stand at $175 to $210 per tonne, down
17 percent on the low end over the same period.
unwilling to book material ahead of further premium falls,
which the consensus considers a certainty.
Offers have come even
lower than the premium ranges. Consumers reported offers below
$170 per tonne for unpaid metal, and below $230 per tonne for
paid product. While deals at this level can be considered
distressed salesthe majority of sellers arent
offering these levelsit is unlikely that consumers will
book at higher levels than those already offered to them.
Consumers are booking
small, hand-to-mouth volumes in order to maintain
They are comfortable
doing so because aluminum is easy to find, with demand for
financing deals shrinking in the face of possible regulatory
measures that could result from ongoing lawsuits in several
U.S. district courts against the LME and warehouse owners.
Consumers reported a
huge range of offers on premiums, with one putting offers in a
"Premiums are falling,
but the problem is that there is a wider range of premiums than
I have ever seen before," another consumer said.
A version of this
article was first published in AMM sister publication Metal