Spot P1020 business has given way to discussions between producers, traders and aluminum consumers focusing on next year’s aluminum supply contracts.
Few deals were closed as a result, which kept Midwest aluminum sport premiums firmly between 11 and 11.50 cents per pounds.
I expected more spot activity because the aluminum price came back down, but I didn’t see it a trader said.
It is likely a case of seasonality, with aluminum producers and consumers looking to end the year with lean inventories, the second trader said. It just means people don’t need to buy and they’re not looking at the price to make a decision. When demand is there and they need to restock, they’ll do it. But no one wants metal at the year end.
Aluminum remains locked in financing deals or long queues, keeping supply off the market. That trend appears unlikely to change next year. “I am still finding the supply side is tight. If you have LME metal, you are sitting pretty. But if you don’t, it is going to be a tough year. Talking with the producers, they’re not doing any favors, a third trader added. Everything seems to be pointing to tight aluminum supply next year.
Excerpts from American Metal Market October 15, 2012
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