CHICAGO Midwest aluminum premiums have held steady after a court decision in the United Kingdom threw the direction of the market in doubt.
AMMs spot P1020 premium was unchanged at 18.25 to 18.5 cents per pound April 11 after edging up earlier in the month following a United Kingdom High Court of Justice ruling that blocked implementation of proposed reforms to London Metal Exchange warehousing policies (amm.com, March 27).
Some sources reported offers of metal at higher numbers, but it was unclear if any significant volumes were transacted at premiums above 18.5 cents per pound. "It could be true, or it could be wishful thinking," one trader said of chatter of metal moving at a premium of 18.75 cents per pound.
The market should be seeing more activity in the seasonally busier spring months, some market sources said, while others noted there might be fewer transactions simply because of the Institute of Scrap Recycling Industries annual convention in Las Vegas.
"Its quiet, a stalemate," a second trader said. "It could be that buyers are price-sensitive or that they bought forward through the second quarter when premiums spiked."
The LMEs primary aluminum cash contract ended the official session April 11 at $1,840.50 per tonne (83.5 cents per pound), up 5.5 percent from $1,744 per tonne (79.1 cents per pound) at the beginning of the month. Those gains came after Midwest premiums reached highs of more than 20 cents per pound earlier in the year (amm.com, Jan. 23).
The historically high premiums continued to anger metal consumers, with some insisting there is no reason for them to have reachedor to have remained atsuch stratospheric levels.
"No one understands why the Midwest is still so high," one consumer source said. "My customers dont understand it. All I can tell them is, I dont understand it either but Ive got to pass it through."
While some market participants said that high premiums are justified by supply-demand fundamentals (amm.com, Feb. 19) and a "short squeeze" in late 2013 and early 2014 (amm.com, Feb. 6), others argued that premiums have been manipulated, echoing the reasoning behind a raft of antitrust lawsuits filed in the United States by consumers against the LME, big banks and warehousing companies (amm.com, Dec. 17).