aluminum consumers will sign short-term deals for the first
quarter of 2014 if the London Metal Exchanges forthcoming
announcement on its new warehousing rules is delayed as they
continue to wait to book 2014 business.
Market sources expect
the LME to broadly confirm the new rules, although there could
be some amendments. Aluminum premiums are expected to fall in
the wake of the announcement, with more metal being made
available to the market as some warehouses reduce intake.
Consumers want to wait
for those falls before committing to 2014 business.
waiting for an announcement. (If it does not come soon) we will
do business on a formula basis for just the first quarter, so
it will not hurt too much," one consumer said. "We cannot wait
An announcement was
expected to quickly follow the LMEs decision over the
warehousing rules Oct. 25, but the regulatory approval process
could delay that for several weeks, market sources warned.
"The LME might have to
wait weeks for regulatory approval," one producer said. "The
board meeting was on Friday and now the decision goes to the
regulators, and then they come back with their views."
While Dec. 1 could be
considered a soft deadline, when warehouses set rates for the
coming year, the LME could push that back if necessary.
"Its a deadline
unless the LME moves it," the producer said.
Spot activity is quiet
and there are no longer people selling low to secure business
in Europe. Premiums firmed in the week ending Oct. 11 after
falling in the third quarter. Duty-paid premiums reached $235
to $255 per tonne vs. $230 to $250 previously, and duty-unpaid
premiums rising to $175 to $200 per tonne from $170 to
"Everyone is sitting
on the fence; consumers dont want to budge," the producer
said. "It could lead to more spot and quarterly business."
A version of this
article was first published in AMM sister publication Metal