London (Platts)--23Nov2012/753 am EST/1253 GMT

The European physical aluminium market has seen little spot activity this week with buyers and sellers continuing to negotiate contracts for next year.

"There is nothing exciting happening. We are still trying to find the right prices and agreements for next year," one consumer said.

He said that he had finalized some small quantities for 2013 but noted that there was still tension on the buyer and seller sides of negotiations, with most buyers looking to secure premiums below the current spot market level.

"Producers have made their offers, but buyers are still trying to push the premiums down," the consumer said.

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He added that most people wanted to achieve premiums below $280/mt for duty-paid material on an in-warehouse basis.

"We cannot live with such high numbers and there is no big excitement for next year. People are only looking to secure material for the first quarter. There is big hesitation amongst buyers beyond the first quarter," he said.

A trader said that there was more and more material being offered into the market because of the approaching December/January backwardation.

"There are more and more warrants being offered and there's metal coming out of the warehouse queues because of the backwardation in December," he said.

The trader said that premiums were unchanged and were around $285-290/mt for duty-paid and $225/mt for duty-unpaid material plus LME cash.

However, he added that premiums were being agreed at the lower end of this range.

Going forward, the trader was unsure whether premiums would remain at their current high levels.

"I could argue that they will go up because of the finance deals, but I also think they will go up if offers are accepted by the consumers. But customers may also choose to continue to buy hand to mouth and then the industry will not do particularly well. I doubt it will be crazy next year," he said.

The trader said he remained optimistic for 2013.

A second consumer said that he was looking to make some year-end inventory adjustments.

"We are trying to adjust our inventory and need to sell around 1,000 mt," he said.

The consumer said that premiums were around $285/mt for duty-paid material and were at $225/mt for duty-paid material plus LME cash.

He said that January looked to be a quiet month for the spot market but added that overall he expected order levels to be similar to this year.

A producer said that he was more focused on negotiations for next year.

He said that he had booked 6,000 mt of material at $235/mt in the first quarter.

"I don't know whether premiums will go up anymore. In Asia, the market is looking weaker and some demand sectors in Europe look to be struggling," he said.

Platts premium assessment for duty-paid Good Western was unchanged this week at $280-295/mt, in-warehouse Rotterdam plus LME cash.

The premium assessment for duty-unpaid Good Western was also unchanged at $225-235/mt plus LME cash, in-warehouse Rotterdam, as was the premium for A7E at $225-235/mt plus LME cash, duty-unpaid in-warehouse Rotterdam.

The premium for A7E FOB St Petersburg remained at $200-210/mt from last week plus LME cash.

--Greg Smart, greg_smart@platts.com
--Edited by James Leech, james_leech@platts.com

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