• Aluminum

North American spot aluminum premiums continue to race upward, grazing 43 month highs in the new year as reduced supply and increased demand create a feeling of tightness in the domestic market.

Fewer US imports of aluminum products are one factor behind the supply side tightness in the domestic market. Russia a top supplier of aluminum material and Venezuela’s state owned producers have been curbing their North American imports in recent quarters. Even as supply continues to dwindle in the North American market, demand for aluminum is growing stronger every day.

Business has picked up over the holidays and hasn’t slowed down since. Traders have seen an up-tick in interest in the first week of the year. We’ve had good demand. Even at the beginning of the year people are kind of restocking and responding to their orders, so it’s been decent demand the trader said. “I think the growth level is coming back slowly and we’re going to see improved volumes.

Today’s tighter supply and stronger demand would normally drive prices on the LME higher, but sources said it is fund money, not fundamentals, currently supporting the price. Three month aluminum closed second ring trade at $2337.50 per tonne Thursday, up 3.5% from $2,259 .00 at the start of the week. The LME is going on a nice run. At these levels, it’s questionable whether people can restart and make money or not. If Alcoa Inc restarts in Tennessee, if Ormet fires back up some potlines, that will put a dent in the premium market.

Excerpts from American Metal Market, January 8th, 2010