A tightening of the North American aluminum spot market has sent premiums to a more than three-year high.

Midwest aluminum spot premiums are between 5.35 and 5.75 cents per pound, with some reported as high as 5.8 cents per pound, traders and producers said, a marked increase from the 5.25- to 5.5-cents-per-pound spread seen since mid-September and the highest level reported to AMM since October 2006.

Scarcity of material is said to be the key factor behind soaring premiums. Most domestic aluminum producers are all but sold out for November—an inconvenient truth for consumers who ran down their inventories over the past year and have come to rely almost exclusively on the spot market to fill orders as they trickle in, market sources said.

"There's still that precarious balance of metal in the warehouse that can be shipped out immediately" vs. material that is tied up in long-term financing deals, one trader said.

"I think the producers are pretty much sold out," a second trader said.