aluminum premiums are continuing to drift down as harsh winter
weather and purchases ahead of expected premium increases have
decreased spot activity and lowered prices, market sources
spot P1020 premium range slipped to 20 to 20.5 cents per pound
Feb. 12 from 20.5 to 21 cents previously.
consumers both said they expect prices to continue to edge
lower, with some claiming that premiums were moving into the
upper teens and could fall significantly further.
"Unless they have
pressing needs, (consumers) arent going to pay these
numbers," one trader said. "There was an unprecedented jump up,
and it could happen the same way on the way down."
spot P1020 premiums shot from 11.5 to 12 cents per pound at the
start of January to as high as 21 cents by the end of the month
amm.com, Jan. 30).
need metal because they loaded up earlier this year on fears
that stratospheric Midwest premiums would move even higher, and
perhaps to lock in low London Metal Exchange prices, some
supplier sources said. Buyers have probably fulfilled their
requirements through the end of March and, in some cases,
through the end of May, they said.
In addition, severe
winter weather has caused production and logistics problems
that might be denting demand, market sources said.
Bad weather usually
restricts scrap flow and pushes transportation costs higher, a
trend that in the past has led to higher premiums, some
"Scrap is tight and
trucks arent moving nearly as much metal as they could in
theory, which should push prices upbut its just not
happening," a second trader said.
Consumer sources said
bad weather was pushing pricing down because it had slowed
their operations or those of their customers, reducing
requirements and, in some cases, forcing them to cancel
"This winter has
across the board caused problems for manufacturing," one
consumer source said. "You have some customers not making
(auto) parts on time because theyve lost two to three
days of production. It doesnt take too much of that to
have a real impact on demand."
Other market sources
brushed aside the idea that prices or demand would take a
long-term hit, claiming that both would resume their upward
march as the snow begins to melt. "February is a short month,
the weather slowed things down even more and people bought
ahead," one producer source said. "But things usually pick up