Physical aluminium premiums edged higher in Europe this week despite a
lukewarm spot business, as some market participants rushed to cover themselves
for the rest of the year and sellers raised their offers, sources told Platts.
European premiums for duty-paid aluminium edged up $5 to $195-205/mt from
$190-205/mt over the London Metal Exchange cash price, in-warehouse Rotterdam,
while the duty-unpaid aluminium premium rose to $125-135/mt from $120-130/mt,
Based on Thursday's LME cash settlement price of $2,446/mt, the 3% import
duty on primary aluminium into the EU would amount to $73/mt.
It is good demand that is driving the premiums up, according to one
"People are consuming a lot. We're equally busy with the spot business
and for the next year. We conclude five trades every day," he said, pointing
to spot premiums at $195-205/mt.
"The aluminium industry is sailing perfectly I would say. Demand is
there, consumption is clear," a central European trader said.
With aluminium inventories running low at the end of the year, sellers
can afford to ask for more.
"I don't have so much metal. Small inventories left are going at high
numbers," one European producer said. "We have a lot of inquiries exceeding
The source sold standard ingot at $205/mt plus the LME cash, in-warehouse
Rotterdam this week.
People have depleted their inventories over the year, said a second
"So everybody is short of metal for next year. People have less metal
over the year," he said. The source has managed to sell ingot at $220-230/mt,
in-warehouse Rotterdam, but quoted premiums at $200/mt.
The first European trader said $230/mt is possible when somebody urgently
needs an ingot, but "I don't think $220-230 is a good reflection."
But as the end of the year approaches, there has been some small,
hand-to-mouth buying, according to a UK-based trader, who has been offering
standard ingot on the spot market at $210/mt, in-warehouse Rotterdam.
Some sellers nevertheless have had a pretty quiet time.
"Premiums have been pretty flat for a long time. It's been pretty quiet,"
said a third European trader who has spent time picking up cheap bits in
unusual locations and selling them at higher premiums.
Some buyers no longer need to buy for this year.
"We're rather fully booked [on the spot market]," said one aluminium
ingot buyer, who only needs to "hunt around" for a higher-purity material.
NEXT YEAR'S PREMIUMS CLOSE TO SPOT LEVELS
Most market sources continued to focus on concluding long-term business
for next year, with premiums near the spot levels.
"We're in sort of a beauty contest at the moment," the ingot buyer said.
People are looking at the best terms, delivery schedules, quality of the
"For the first quarter, we have concluded some contracts already and
we're still looking," the source said.
But high premiums continue to discourage buyers and a lot of people are
waiting to book metal.
"That is why we don't go beyond the first quarter," the source said.
A second ingot consumer said: "The level is really crazy. I've never seen
these numbers. I'm cautious to do business."
"People are scared to book. They're going to get burnt," said the first
trader, pointing out that premiums should firm even further next year.
The central European trader bought a small amount of aluminium for the
first half of 2011 at around $190/mt, in-warehouse Rotterdam, but he declined
material at $200/mt. Various producers have offered aluminium for next year at
$195/mt, the trader said.
"We insist on firm numbers," a second European producer said, quoting
offer premiums at $130-135/mt for duty-unpaid material. "We are quite bullish
as far as Rotterdam premiums are concerned," he said.
Platts raised the A7E duty-unpaid aluminium premium assessment from
$120-130/mt to $125-135/mt plus LME cash, in-warehouse Rotterdam. The
duty-unpaid A7E, FOB St. Petersburg premium stood at $100-115/mt plus LME
--Agnieszka Troszkiewicz, firstname.lastname@example.org
Similar stories appear in Metals Week
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