European physical aluminium: Spot even higher, sentiment bullish

London (Platts):Premiums for duty-paid aluminium ingot surged higher in Europe this week,pushed up by market-wide bullish sentiment, booming economic conditions and tight supply, market sources said Wednesday. The Platts Good Western duty-paid premium inched higher to $135-140/mt plus the London Metal Exchange cash price, in-warehouse Rotterdam, from $130-135/mt a week earlier. And while some producers and traders insisted premiums were far higher, reporting deals in excess of $145/mt, consumers said it was still possible, albeit difficult, to bargain premiums lower. "The market is extremely positive," said a trader,adding that consumers caught short were forced to buy at current high levels."Everyone is tight, even some producers are short. Some people are already sold out for next year," he said, adding that with the upward premium trend,players needed to take a position now rather than get priced out of the market. The trader said he had sold prompt material to end users at $160/mt this week: "Some customers are very short nearby and are now buying hand to mouth." A consumer said demand in Europe was still "very good" and casthouse order books were full for next year. He said he had managed to buy some spot material at $130/mt on Wednesday as "some traders are getting rid of material because of the back on the cash-to-threes. Even a small contango is not enough to finance stock." A producer-buyer source said he had sold spot duty-paid at $140-145/mt this week. "There is concern over availability and demand is very good," he said.A second buyer said he had not bought below $140/mt this week."I thought the market would drop, but it hasn't," he said.

Meanwhile in the unpaid market, premiums were also heard higher, with one trader reporting a deal at $85/mt this week. The producer also said he had sold at $80-85/mt, but a consumer said he had managed to bargain a seller down to $65/mt and $68/mt for spot unpaid this week. He later admitted that $70/mt was "a good number." A second producer buyer said there appeared to be more unpaid than duty-paid around, "but the possibility of converting material is limited" which has put downward pressure on unpaid premiums. On the contract front, sellers remained bullish. A producer said he had sold 2007 material at $140/mt, while a trader said he had done contract business at $141/mt for next year. But, some buyers were still resisting the increases. "For contract, I will stick to $130-135/mt for duty-paid and I would never pay $80/mt for unpaid," said a consumer. A buyer source said he was still pushing for $125/mt on contract and he believed "other buyers are in the same boat."