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Aluminum market a Grinch as European premiums rise

Keywords: Tags  aluminum, aluminum premiums, European premiums

LONDON — As the year draws to a close, base metal premiums tend to stagnate as activity levels fall and consumers head home for the holidays, but aluminum has other ideas.

European aluminum premiums climbed throughout the fourth quarter before settling in early December at $255 to $275 per tonne for duty-paid metal.

Consumers that had held off buying in the hope of lower premiums ahead of the London Metal Exchange changing its warehouse load-out rates were forced to buy their volumes at the last minute when it became clear that the premiums weren’t wavering.

The consumers got what they needed, but traders are still keen on the light metal. A lack of backwardations anywhere on the LME forward curve, as well as continuing low interest rates, have maintained demand for aluminum financing deals. There has been a spate of buying in the last full working week of the year, and premiums have risen again.

The duty-paid aluminum premium of AMM sister publication Metal Bulletin rose to $270 to $290 per tonne Dec. 18 as traders reported a flurry of business at higher levels. Duty-unpaid premiums rose to $210 to $230 per tonne from $200 to $210 on the same date.

Consumers, already feeling the pinch of increases to premiums earlier in the fourth quarter, will be arriving back in the office in the New Year to the news that premiums are up another $15 per tonne since they left.

A version of this article was first published by AMM sister publication Metal Bulletin.

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