CHICAGO Midwest aluminum premiums remain on a steady downward course as buyers appear to be winning a tug of war on price.
AMMs spot P1020 premium narrowed to 18.15 to 18.25 cents per pound March 26 from 18.15 to 18.5 cents previously.
Several suppliers reported making offers as high as 18.5 cents per pound while some consumers said they were looking to pay no more than 18 cents per pound, and recorded transactions fell in the lower half of that range.
There is decent demand and availability, so theres good two-way business, one trader said, citing firm automotive activity and an expected seasonal ramp-up in building and construction. But premiums were at all-time highs, so its not unusual that they might drop a little bit.
AMMs spot P1020 premiums have consistently edged down in recent weeks (amm.com, March 24) after jumping to 19 to 20 cents per pound Jan. 15 from 11.5 to 12 cents in late December (amm.com, Jan. 16).
Other suppliers said other factors, including a tight scrap market, production cutbacks and logistical snarls, as well as increased supply-side risk due to tensions between the West and Russia, should keep premiums from fallingor at least from falling precipitously.
A second trader cautioned that consumers might be winding down inventories to bolster balance sheets at the end of their fiscal year, a move that could see them looking to restock in time for produce season. That means metal companies could be competing for trucks in a market still short on capacity following a difficult winter across much of North America, he said.
There also is less nearby availability in the Midwest, given production cuts, which could lead to higher premiumsparticularly in the Southeastbecause of increased freight charges to ship material south from Quebec, he added.
But consumers generally brushed aside such concerns, contending that they were having little difficulty securing metal at or below published premiums, which are generally a bit behind the curve, one consumer source said.
Premiums are still ticking down a little bit, a second consumer source said, adding that he did not expect the trend to change in the short term.